Revenue interest charges are unfair

The Inland Revenue is being accused of being unfair to taxpayers because of the difference between the interest it charges and the interest it pays.

The Association of Chartered Certified Accountants (ACCA) says that the Revenue should pay the same rate of interest on tax which is overpaid as it charges people who settle their bill late.

From September 6 the rate at which the Revenue charges interest on late payments of National Insurance, capital gains tax and stamp duty will rise by 1 per cent to 7.5 per cent a year.

But the rate at which the Revenue pays interest on tax that has been overpaid will rise to just 3.5 per cent, leaving a 4 per cent gap between the two rates.

Chas Roy-Chowdhury of ACCA said: "The gap between the interest rates for late payment compared with those for overpaid tax or errors is heavily weighted in the Revenue's favour.

"Now standing at 4 per cent, the gap is inexcusable, particularly given that interest charges are only one part of the equation.

"Late payers can also be subjected to many other surcharges, penalties and fines under the tax system.

"The Inland Revenue should be subject to the same penalties and interest charges which it imposes on its taxpayers."