# The Taxes and Duties (Interest Rate) (Amendment) Regulations 2009 S.I. 2009/2032 · made 21 July 2009 The Taxes (Interest Rate) Regulations 1989 specify rates of interest applicable for the purposes of the enactments specified in section 178(2) of the Finance Act 1989. The Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 specify rates of interest applicable for the purposes of the enactments specified in section 197(2) of the Finance Act 1996. Made under: Finance Act 1989 (Section 178); Finance Act 1996 (Section 197) PDFs: Printed copy https://openlegislation.uk/taxes-and-duties-interest-rate-amendment-regulations-2009/pdf/uksi_20092032_en.pdf; Explanatory Memorandum https://openlegislation.uk/taxes-and-duties-interest-rate-amendment-regulations-2009/pdf/uksiem_20092032_en.pdf ## Introductory text Revenue And Customs Made 21st July 2009 Laid before the House of Commons 22nd July 2009 Coming into force 12th August 2009 The Treasury make the following Regulations in exercise of the powers conferred by section 178(1) to (3) of the Finance Act 1989 and section 197 of the Finance Act 1996. ## 1 Citation and commencement These Regulations may be cited as the Taxes and Duties (Interest Rate) (Amendment) Regulations 2009 and shall come into force on 12th August 2009. ## 2 Amendment of the Taxes (Interest Rate) Regulations 1989 The Taxes (Interest Rate) Regulations 1989 are amended as follows. ## 3 Amendment of regulation 2 (1) Amend regulation 2 (interpretation) as follows. (2) In paragraph (1)— (a) in sub-paragraph (a) of the definition of “operative date” for “eleventh” substitute “twelfth”, (b) in sub-paragraph (a) of the definition of “reference date” omit “second”. (3) For paragraph (2) substitute— “(2) In these Regulations the reference rate found on a reference date is the official bank rate determined by the most recent meeting of the Monetary Policy Committee of the Bank of England.”. ## 4 Omission of regulation 2A Omit regulation 2A. ## 5 Amendment of regulation 3AA (1) Amend regulation 3AA as follows. (2) In paragraph (1)— (a) in sub-paragraph (c) omit “and 16”, and (b) omit sub-paragraphs (d) and (f). (3) In paragraph (2) omit the words after “paragraph (3)” to the end. (4) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR+2.5, where RR is the reference rate referred to in paragraph (2).”. ## 6 Insertion of new regulation 3AAA After regulation 3A insert— “3AAA. (1) For the purposes of— (a) paragraph 16 of Schedule 2 to the Oil Taxation Act 1975, (b) paragraph 59 of Schedule 8 to the Development Land Tax Act 1976, and (c) section 825 of, and paragraph 3 of Schedule 19A to, the Income and Corporation Taxes Act 1988, the rate applicable under section 178 shall, subject to paragraph (3), be the percentage per annum found by applying the formula specified in paragraph (2), but if the result is not a multiple of one-quarter the result shall be rounded down to the nearest amount which is such a multiple. (2) The formula specified for the purposes of paragraph (1) is— ( RR+2.5 )×80 100 , where RR is the official bank rate determined at the meeting of the Monetary Policy Committee of the Bank of England which immediately preceded the coming into force of these Regulations. (3) Where on a reference date after the coming into force of these Regulations, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (4). (4) The formula specified in this paragraph is— RR−1, where RR is the reference rate referred to in paragraph (3).”. ## 7 Amendment of regulation 3AB (1) Amend regulation 3AB as follows. (2) In paragraph (2) for the words from “percentage” to the end substitute— “higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (3).”. (3) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR−1, where RR is the reference rate referred to in paragraph (2).”. ## 8 Amendment of regulation 3A (1) Amend regulation 3A as follows. (2) In paragraph (2) omit the words after “paragraph (3)” to the end. (3) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR+2.5, where RR is the reference rate referred to in paragraph (2).”. ## 9 Amendment of regulation 3B (1) Amend regulation 3B as follows. (2) In paragraph (2) for the words from “percentage” to the end substitute— “higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (3).”. (3) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR−1, where RR is the reference rate referred to in paragraph (2).”. ## 10 Amendment of regulation 3BA (1) Amend regulation 3BA as follows. (2) In paragraph (2) for the words from “percentage” to the end substitute— “higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (4).”. ## 11 Amendment of regulation 3BB (1) Amend regulation 3BB as follows. (2) In paragraph (2) for the words from “percentage” to the end substitute— “higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (3).”. ## 12 Amendment of regulation 4 (1) Amend regulation 4 as follows. (2) In paragraph (1)— (a) in sub-paragraph (f) omit “236(3) and (4)”, (b) after sub-paragraph (f) insert— “(g) section 236(4) of the Inheritance Tax Act 1984 so far as it relates to tax charged by virtue of section 147(4) of that Act.”. (3) In paragraph (2) omit the words after “paragraph (3)” to the end. (4) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR+2.5, where RR is the reference rate referred to in paragraph (2).”. ## 13 Insertion of new regulation 4A After regulation 4 insert— “Applicable rate on repayments of inheritance tax, capital transfer tax and estate duty 4A. (1) For the purposes of— (a) section 48(1) of the Finance Act 1975, (b) sections 235(1) of the Inheritance Tax Act 1984, (c) section 236(3) of the Inheritance Tax Act, and (d) section 236(4) of the Inheritance Tax Act so far as it relates to tax repayable under section 147(2) of that Act, the rate applicable under section 178 shall, subject to paragraph (3), be the percentage per annum found by applying the formula specified in paragraph (2), but if the result is not a whole number the result shall be rounded down to the nearest such number. (2) The formula specified for the purposes of paragraph (1) is— ( RR+2 )×80 100 −1, where RR is the official bank rate determined at the meeting of the Monetary Policy Committee of the Bank of England which immediately preceded the coming into force of these Regulations. (3) Where on a reference date after the coming into force of these Regulations, the reference rate found on that date differs from the established rate, the rate applicable under section 178 for the purposes of the enactments referred to in paragraph (1) shall, on and after the next operative date, be the higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (4). (4) The formula specified in this paragraph is— RR−1, where RR is the reference rate referred to in paragraph (3).”. ## 14 Amendment of regulation 6 In regulation 6 for “regulation 3(1) or 4(1)” substitute “these Regulations”. ## 15 Amendment of the Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 The Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 are amended as follows. ## 16 Amendment of regulation 2 (1) Amend regulation 2 (interpretation) as follows. (2) In paragraph (1)— (a) in the definition of “operative day” for “eleventh” substitute “twelfth”, (b) in the definition of “reference day” omit “second”. (3) For paragraph (2) substitute— “(2) In these Regulations the reference rate found on a reference date is the official bank rate determined by the most recent meeting of the Monetary Policy Committee of the Bank of England.”. ## 17 Omission of regulation 2A Omit regulation 2A. ## 18 Amendment of regulation 5 (1) Amend regulation 5 as follows. (2) In paragraph (2) for the words from “percentage” to the end substitute— “higher of— (a) 0.5% per annum, and (b) the percentage per annum found by applying the formula specified in paragraph (3).”. (3) For paragraph (3) substitute— “(3) The formula specified in this paragraph is— RR - 1, where RR is the reference rate referred to in paragraph (2).”. ## Signature Dave Watts Frank Roy Two of the Lords Commissioners of Her Majesty’s Treasury 21st July 2009 ## Explanatory note (This note is not part of the Regulations) The Taxes (Interest Rate) Regulations 1989 specify rates of interest applicable for the purposes of the enactments specified in section 178(2) of the Finance Act 1989. The Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 specify rates of interest applicable for the purposes of the enactments specified in section 197(2) of the Finance Act 1996. These Regulations amend the definitions of “operative date” and “reference date” in regulation 2(1) of the Taxes (Interest Rate) Regulations 1989 and the definitions of “operative day” and “reference day” in regulation 2(1) of the Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998. These amendments do not change the time taken to change interest rates in relation to unpaid or overpaid tax but are consequential to other amendments made in these Regulations. These Regulations amend the meaning of “reference rate” in regulation 2(2) of the Taxes (Interest Rate) Regulations 1989 and the in the Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 so that the determination of interest rates under those Regulations is based on the official bank rate determined by the most recent meeting of the Monetary Policy Committee of the Bank of England. These Regulations omit regulation 2A in the Taxes (Interest Rate) Regulations 1989 and the in the Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 (which provided that if the result of the calculation of the rate of interest under those Regulations for any purposes is less than zero, the rate shall be treated as zero for those purposes) and amends the provisions in those Regulations dealing with overpayments of tax or duty. These amendments omit a minimum rate in relation to late payments of tax or duty and increase the minimum rate in relation to overpayments from zero to 0.5% per annum. The formulas to determine the rates of interest provided in the Taxes (Interest Rate) Regulations 1989 and the in the Air Passenger Duty and Other Indirect Taxes (Interest Rate) Regulations 1998 are simplified and harmonised by the amendments made in these Regulation so that (except in relation to large companies where regulation 3ZA or 3BA of the Taxes (Interest Rate) Regulations 1989 apply) the rate in cases of unpaid tax or duty is found by the formula- reference rate + 2.5, and the rate in the case of overpaid tax or duty is found by the formula- reference rate – 1. These Regulations also insert a new regulation 3AAA and a new regulation 4A in the Taxes (Interest Rate) Regulations 1989. New regulation 3AAA makes provision for interest on overpayments of the taxes which are omitted by these Regulations from regulation 3AA (so that that regulation can apply solely to late payments of tax). New regulation 4A provides for interest on overpayments of estate duty and inheritance tax in line with that for other taxes. A full Impact Assessment has been produced for this instrument and forms part of the Impact Assessment produced for interest harmonisation in the Finance Bill 2009. It is available on the HMRC website under http://www.hmrc.gov.uk/budget2009/interest-penalties-2410.pdf. --- Source: https://www.legislation.gov.uk/uksi/2009/2032 (the official version) Page: https://openlegislation.uk/taxes-and-duties-interest-rate-amendment-regulations-2009 Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.