Income and Corporation Taxes Act 1988

824 Repayment supplements: individuals and others

(1) Subject to the provisions of this section, where—

(a) income tax has been paid by or on behalf of an individual for a year of assessment for which he was resident in the United Kingdom; and

(b) a repayment of that tax of not less than £25 is made by the Board or an inspector after the end of the 12 months following that year of assessment;

the repayment shall be increased under this section by an amount (a (“repayment supplement”) equal to interest on the amount repaid at the rate of 8.25 per cent. per annum for the period (if any) between the relevant time and the end of the tax month in which the order for the repayment is issued.

(2) Subsection (1) above shall with the necessary modifications apply to a payment of the whole or part of a tax credit as it applies to a repayment falling within that subsection of income tax paid in the year of assessment to which the tax credit relates.

(3) For the purposes of subsection (1) above—

(a) if the repayment is of tax that was paid after the end of the 12 months following the year of assessment for which it was payable, the relevant time is the end of the year of assessment in which that tax was paid;

(b) in any other case, the relevant time is the end of the 12 months mentioned in that subsection;

and, subject to subsection (5) below, where a repayment to which subsection (1) above applies is of tax paid in two or more years of assessment, the repayment shall as far as possible be treated for the purposes of this subsection as a repayment of tax paid in a later rather than an earlier year among those years.

(4) For the purposes of subsections (1) and (3) above, income tax deducted by virtue of regulations made under section 203 from a person’s emoluments during any year of assessment shall (without prejudice to subsection (5) below) be treated as paid by him for that and no other year of assessment.

(5) Where in consequence of an assessment under Schedule E for any year of assessment there is made by the Board or an inspector a repayment of income tax of not less than £25, being an amount which takes account of tax overpaid or remaining unpaid for one or more earlier years of assessment, then—

(a) the repayment shall for the purposes of this subsection be attributable to such of the years in question, and in such proportions, as may be determined in accordance with regulations made under and for the purposes of this subsection by the Board; and

(b) subsections (1) and (3) above shall have effect in relation to so much of the repayment as is by virtue of paragraph (a) above attributed to any particular year of assessment as if in subsection (1) the words “of not less than £25” were omitted.

(6) The Treasury may by order from time to time increase or decrease the rate of interest by reference to which—

(a) repayment supplements are calculated under subsection (1) above; and

(b) repayment supplements are calculated under section 47 of the [1975 c. 45.] Finance (No. 2) Act 1975.

(7) A repayment supplement shall not be payable under this section in respect of a repayment or payment made in consequence of an order or judgment of a court having power to allow interest on the repayment or payment, or in respect of a repayment of a post-war credit within the meaning of the [1959 c. 28.] Income Tax (Repayment of Post-War Credits) Act 1959.

(8) A repayment supplement paid to any person under this section or under section 47 of the [1975 c. 45.] Finance (No. 2) Act 1975 shall not be income of that person for any tax purposes.

(9) Subsections (1) to (8) above shall apply in relation to a partnership, or a United Kingdom trust (as defined in section 231), or, in the case of a United Kingdom estate, the personal representatives of a deceased person as such (within the meaning of section 701) as they apply in relation to an individual.

(10) In this section—

• “tax month” means the period beginning with the 6th day of any calendar month and ending with the 5th day of the following calendar month;

• “United Kingdom estate” has the meaning given by section 701.