When does late payment interest begin to accrue under section 157B of the Tax Collection and Management (Wales) Act 2016?

Late payment interest accrues when an amount relating to a tax credit is not paid by its due date. Interest runs at the prescribed late payment interest rate from a defined start date, which depends on how the credit was originally claimed or whether a repayment deadline was missed, through to the date of actual payment.

How is the start date for late payment interest determined if a tax credit was claimed through a tax return?

Where the Welsh Revenue Authority assesses that a tax credit claimed through a tax return was overclaimed, late payment interest starts from the day after the filing date for that return. Interest continues to accrue at the prescribed rate until the outstanding amount is actually paid by the taxpayer.

What happens to the late payment interest start date if a tax credit was not claimed through a tax return?

If the tax credit was claimed by means other than a tax return, and the WRA later determines it was overclaimed or incorrectly claimed, late payment interest begins from the day after the amount was actually paid out to the claimant rather than from any return filing date.

Does a different rule apply for late payment interest if the taxpayer has died?

Yes. Where the taxpayer has died, section 160 of the Tax Collection and Management (Wales) Act 2016 may set a different start date for the accrual of late payment interest. This special provision overrides the standard start dates that would otherwise apply under section 157B.

Tax Collection and Management (Wales) Act 2016 section 157B

Late payment interest on amounts payable in respect of tax credit

Section 157B establishes when late payment interest begins to accrue on amounts owed to the Welsh Revenue Authority (WRA) in connection with tax credits that have been incorrectly claimed or not repaid on time.

Where an amount relating to a tax credit is not paid by its due date, it attracts late payment interest at the prescribed rate from the relevant start date until the date of actual payment.
If the WRA issues an assessment because a tax credit was incorrectly claimed (whether via a tax return or by other means), interest runs from the day after the return filing date, or the day after the credit was paid out, as applicable.
If the WRA assessment relates to an amount that was required to be repaid by a specific date, interest runs from the day after that repayment deadline.
Where the taxpayer has died, a separate provision applies which may set a different start date for the accrual of late payment interest.

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