EIM46080 | Section 554Z11C: Chapter 2 liability equal to or greater than earlier charges – Chapter 2 aggregate paid amounts and earlier charges

ITEPA 2003 – section 554Z11C(7) - (10)

Where a taxpayer makes a payment towards a Chapter 2 tax liability such as was mentioned in section 554Z11C – Chapter 2 liability equal to or greater than earlier charges, he or she will also be making payment towards any relevant Chapter 2 overlap charges contained in that liability.

Where a payment is made in respect of 2 or more relevant Chapter 2 overlap charges or their associated late payment interest, any such payment is known as a Chapter 2 aggregate paid amount.

The relevant Chapter 2 overlap charges relate to a part of the overall Chapter 2 tax liability. To give relief against the tax charges arising on the earlier items, it is necessary to identify the earlier charges. These are the amounts of the liability in respect of each earlier individual item which overlap with sum or asset P.

Where a Chapter 2 aggregate paid amount is paid, it can be apportioned between the earlier charges on a just and reasonable basis. Once the amount has been apportioned, the payments allocated to the earlier charges can be used as payments on account of the earlier charges to which they are allocated. If the earlier charge is paid in full, the amount allocated can be treated as a payment on account of any interest payable in respect of that charge.