BIM42520 | Specific deductions: administration: interest, penalties and surcharges on UK taxes
From HM Revenue & Customs · Business Income Manual
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No deduction is allowed in computing the taxable profits of a trade for any of the following:
| Interest, penalty or surcharge | Description of tax, levy or duty |
|---|---|
| Interest under any provision of (This applies to profits chargeable to Income Tax only) | Income Tax, Capital Gains Tax and Corporation Tax |
| Interest required to be paid under the construction industry scheme | |
| Penalty under S-S Value Added Tax Act 1994 () | Value Added Tax |
| Interest under S, S VATA 1994 | |
| Surcharge under | |
| Penalty under S-S Finance Act 1994 () | Excise duties |
| Penalty under Sch7 Paras- FA 1994 | Insurance Premium Tax |
| Interest under S or Sch 7 Para FA 1994 | |
| Penalty under Sch5 Par 5 () | Landfill Tax |
| Interest under S or Sch5 Paras, FA 1996 | |
| Penalty under any provision of | Climate change levy |
| Interest under any of Paras70, 81-85, 109 and 123(6) of that Schedule | |
| Penalty under any provision of Part2 () | Aggregates levy |
| Interest under S, Sch5 Paras5-, Sch8 Para6, Sch10 Para5 FA 2001 | |
| Penalty under S or S Finance Act 2003 () | Customs, export and import duties |
| Penalty and interest under | Stamp Duty Land Tax |
| Penalty under | Various taxes and excise duties |
| Penalty under | Various taxes and excise duties |
| Penalty under Sch 16 Finance Act (No. 2) 2017 | Various taxes |
and specifically disallow deductions of some HMRC penalties, including some that relate to offences concerning direct tax (e.g. under Schedule 24 and Schedule 41), included in the list as part of the introduction of the single penalties regime. There are HMRC penalties that are not included in the above list. This does not mean that they are allowable deductions. HMRC penalties are not considered normal recurring expenses incurred in agreeing the tax liability (see ). It is also unlikely that HMRC penalties will have been incurred wholly and exclusively for the purposes of the trade (see ).