Interest and penalties in respect of certain contributions
19.—(1) In section 128 of the principal Act (destination of contributions, etc.), after the subsection (2A) inserted by Article 18 there shall be inserted the following subsection—
“(2B) The sums paid over to the Department by the Secretary of State under section 9(6) of the Social Security Act 1975 and by the Inland Revenue under paragraphs 5(3)(b) and 5A(7) of Schedule 1 to this Act in respect of interest and penalties recovered by them in connection with contributions of any class shall be paid, in accordance with any directions given by the Department of Finance and Personnel, into the National Insurance Fund.”.
(2) In section 129 of that Act (general financial arrangements), after subsection (6) there shall be added the following subsection—
“(7) Any expenditure in respect of the payment of interest or repayment supplements under or by virtue of paragraph 5 of Schedule 1 to this Act or paragraph 7 of Schedule 2 to the Social Security Act 1975 shall be defrayed out of the National Insurance Fund in accordance with any directions given by the Department of Finance and Personnel.”.
(3) In paragraph 5 of Schedule 1 to that Act (power to combine collection of contributions with collection of tax), after sub-paragraph (1) there shall be inserted the following sub-paragraphs—
“(1A) Without prejudice to the generality of sub-paragraph (1) above, the provision that may be made by virtue of paragraph (a) of that sub-paragraph includes, in relation to Class 1 contributions—
(a)provision for requiring the payment of interest on sums due in respect of Class 1 contributions which are not paid by the due date, for determining the date (being not less than 14 days after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated and for enabling the repayment or remission of such interest;
(b)provision for requiring the payment of interest on sums due in respect of Class 1 contributions which fall to be repaid and for determining the date (being not less than one year after the end of the tax year in respect of which the sums are due) from which such interest is to be calculated;
(c)provision for, or in connection with, the imposition and recovery of penalties in relation to any returns required to be made which relate to Class 1 contributions, but subject to sub-paragraph (2) and paragraph 5A below;
and any reference to contributions or income tax in paragraph (b) or (c) of sub-paragraph (1) above shall be construed as including a reference to any interest or penalty in respect of contributions or income tax, as the case may be.
(1B) The rate of interest applicable for any purpose of this paragraph shall be—
(a)the rate from time to time prescribed under section 178 of the Finance Act 1989 for the purpose of any enactment (whether or not extending to Northern Ireland) if prescribed by regulations made by virtue of this paragraph; or
(b)such other rate as may be prescribed by such regulations.
(1C) Regulations under this paragraph may require the payment of interest on sums due in respect of contributions, notwithstanding that a question arising in relation to the contributions has not been determined under section 93 of this Act by the Department, except that where—
(a)any such question arises which affects a person’s liability for, or the amount of, any such interest, and
(b)either—
(i)that person requires the question to be determined under section 93, or
(ii)a question of law arising in connection with the determination of the question is, or is to be, referred to the court under section 94 of this Act,
the regulations shall not require the payment of any such interest until the question has been determined under section 93 by the Department or the reference has been finally disposed of under section 94, as the case may be; but, subject to that, this paragraph is without prejudice to sections 93, 94 and 96 of this Act.”.
(4) In sub-paragraph (3) of that paragraph (payment of receipts to Department), after the words “pay to it” there shall be inserted “(a)” and at the end of that sub-paragraph there shall be added thewords
“; and
(b)so much of any interest recovered by the Inland Revenue by virtue of this paragraph as remains after the deduction by them of any administrative costs attributable to its recovery”.
(5) After that paragraph there shall be inserted the provisions set out in Schedule 5, which relate to the imposition and recovery of certain penalties.