A Tax on Restitution Interest?
The recent Autumn Statement highlighted new legislation, proposed in the latest version of the Finance Bill, to tax certain restitution payments made to taxpayers. The proposal means that payments of interest (other than simple statutory interest) due on repayments of tax made to taxpayers in cases of official error will incur a 45% corporation tax charge at source!
This is a novel and bold way of limiting the impact on the Treasury of compound interest claims following the significant judgments in Sempra Metals and Littlewoods. If enacted expect to see it challenged in the domestic and European courts!
Tax on restitution interest - Compounding misery
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