1(1)This paragraph applies where as regards a tax year—U.K.
(a)payments on account are payable by a person (“P”),
(b)P makes a claim under section 59A(3) or (4) of TMA 1970 (reduction of payments on account) in respect of those amounts, and
(c)a balancing payment becomes payable by P.
(2)Late payment interest is to be calculated as if each of the payments on account had been equal to the lesser of the following amounts—
(a)the aggregate of that payment on account and 50% of the balancing payment, and
(b)the amount which would have been payable as a payment on account if the claim under section 59A(3) or (4) had not been made.
(3)In determining for the purposes of this paragraph what amount (if any) is payable by P as a balancing payment—
(a)it is to be assumed that both of the payments on account have been paid,
(b)no account is to be taken of any amount which has been paid on account otherwise than under section 59A(2) of TMA 1970, and
(c)no account is to be taken of any amount which is payable by way of capital gains tax.
(4)In this paragraph—
“balancing payment” means an amount payable—
(a)in accordance with section 59B(3), (4) or (5) of TMA 1970, or
(b)in accordance with section 59B(6) of that Act in respect of income tax assessed under section 29 of that Act;
“payment on account” means an amount payable in accordance with section 59A(2) of TMA 1970.