Section 87 | Interest on unpaid tax

(1)Interest is payable on the amount of any unpaid tax from the end of the period of 30 days after the relevant date until the tax is paid.

(1A)But where the relevant date is determined by subsection (3)(aa), (aaa), (ab) or (c) or section 87A(4) or (6), and a return is required to be delivered before the end of the period of 14 days after that relevant date, interest is instead payable on the amount of any unpaid tax from the end of that period until the tax is paid.^F1F2

(2)The Inland Revenue may by regulations amend subsection (1) or (1A) so as to make interest run from the end of such shorter period after the relevant date as may be prescribed or, if the regulations so provide, from that date.^F3

(3)For the purposes of this section “the relevant date” is—

(za)in the case of an amount payable because relief is withdrawn under any of paragraphs 5G to 5L of Schedule 4A (higher rate for certain transactions), the date which is the relevant date for the purposes of section 81(1A);^F4F5

(zb)in the case of an amount payable because relief is withdrawn under any of paragraphs 6D, 6F, 6G, 6H and 6I of Schedule 4A, the date which is the date of the disqualifying event for the purposes of section 81ZA (see subsection (3) of that section);^F6

(a)in the case of an amount payable because relief is withdrawn under—

(ia)Schedule 6A (relief for certain acquisitions of residential property),^F7

(i)Part 1 of Schedule 7 (group relief),

(ii)Part 2 of that Schedule (reconstruction or acquisition relief), ...^F8

(iia)paragraph 5, 7 or 8 of Schedule 7A (PAIF seeding relief),^F9

(iib)paragraph 13, 17 or 18 of Schedule 7A (co-ownership scheme seeding relief), or (except in a case to which section 87A applies)^F9F10F11

(iii)Schedule 8 (charities relief),

the date of the disqualifying event;

(aza)Repealed^F12

(azaa)in the case of an amount payable because relief is withdrawn under Part 3 of Schedule 6C (relief for special tax sites), other than in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies, the date which is the relevant date for the purposes of section 81(1A);^F13F14

(azab)in the case of an amount payable because relief is withdrawn under Part 3 of Schedule 6C (relief for special tax sites) in a case to which paragraph 11 of that Schedule (alternative finance arrangements) applies, the date which is the date of the disqualifying event for the purposes of section 81ZA (see subsection (3) of that section);^F13F15

(azb)in the case of an amount payable under paragraph 6(3) of Schedule 7A (PAIF seeding relief: portfolio test), the first time mentioned in paragraph 6(3)(a) or (b) at which the portfolio test was not met;^F16

(azc)in the case of an amount payable under paragraph 14(1) of Schedule 7A (co-ownership scheme seeding relief: genuine diversity of ownership condition) because the genuine diversity of ownership condition was not met at a time mentioned in paragraph 14(1)(b) or (c), the first time mentioned in paragraph 14(1)(b) or (c) at which that condition was not met;^F16F17

(azd)in the case of an amount payable under paragraph 16(3) of Schedule 7A (co-ownership scheme seeding relief: portfolio test), the first time mentioned in paragraph 16(3)(a) or (b) at which the portfolio test was not met;^F16F18

(aa)in the case of an amount payable under section 81A in respect of an earlier transaction because of the effect of a later linked transaction, the effective date of the later transaction;^F19

(aaa)in the case of an amount payable under paragraph 3(3) of Schedule 17A (leases that continue after a fixed term) by reason of the continuation of a lease for a period (or further period) under paragraph 3(2) or (6) of that Schedule, the final day of the period (or further period),^F20

(ab)in the case of an amount payable under paragraph ... 4(3) of Schedule 17A (... treatment of leases for an indefinite term), the day on which the lease becomes treated as being for a longer fixed term;^F21F22

(b)in the case of a deferred payment under section 90, the date when the deferred payment is due;

(c)in any other case, the effective date of the transaction.

(4)In subsection (3)(a) “the disqualifying event” has the same meaning as in section 81(4) (except in a case to which section 87A applies).^F23F24

(5)Subsection (3)(c) applies in a case within section 51 (contingent, uncertain or unascertained consideration) if payment is not deferred under section 90, with the result that interest on any tax payable under section 80 (adjustment where contingency ceases or consideration is ascertained) runs from the effective date of the transaction.

(6)If an amount is lodged with the Inland Revenue in respect of the tax, the amount on which interest is payable is reduced by that amount.

(7)Interest is calculated at the rate applicable under section 178 of the Finance Act 1989 (c. 26) (power of Treasury to prescribe rates of interest).