Following the decision by the Bank of England to increase the base rate, HMRC has confirmed that the late payment interest rate rose a quarter of a percent.

The increase applies from 14 February 2022 for quarterly instalment payments and from 21 February 2022 for non-quarterly instalment payments.

On 2 February 2022, the Bank’s Monetary Policy Committee (MPC) increased the base rate to 0.5%.

As HMRC interest rates are linked to the Bank of England base rate, the increase in the base rate from 0.25% to 0.5% triggered an increase in rates for late payments.

On 4 February 2022, HMRC announced that the current late payment interest rate applied to the main taxes and duties would rise to 3% from 2.75%, effective from 21 February 2022.

The 3% rate is applied to late payments for income tax, national insurance contributions (NICs), capital gains tax (CGT), stamp duty land tax (SDLT), stamp duty and stamp duty reserve tax.

The corporation tax pay and file rate will also rise to 3% for late payments, while the repayment rate remains at 0.5%.

The rate for corporation tax self assessment, if unpaid from normal due date, will also be charged at 3%. The interest charged on underpaid quarterly instalment payments rises to 1.5% from 1.25%.

This is the second rate rise in just over a month following two consecutive rises in the Bank of England base rate. In line with the December 2021 announcement, interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments remains at 0.5%, which is unchanged since March 2009.

Internet link: GOV.UK

The government must overhaul motoring taxes as it phases out new diesel and petrol vehicles, according to MPs.

MPs on the Transport Committee say the government must come up with new policy options by the end of the year. A ban on the sale of new diesel and petrol vehicles will be introduced by 2030, which means £35 billion will be lost in tax revenue.

In a report entitled Road Pricing, the Committee favoured a road charging system based on technology which measures road use.

Any scheme would include the drivers of electric vehicles, who would be required to pay for road usage. It would also cover vans and HGV vehicles, as well as overseas vehicle drivers.

Huw Merriman MP, Chair of the Transport Committee, said:

‘We need to talk about road pricing. Innovative technology could deliver a national road-pricing scheme which prices up a journey based on the amount of road, and type of vehicle, used. Just like our current motoring taxes but, by using price as a lever, we can offer better prices at less congested times and have technology compare these directly to public transport alternatives.

‘By offering choice, we can deliver for the driver and for the environment. Road pricing should not cost motorists more, overall, or undermine progress on active travel. Work should begin without delay. The situation is urgent. New taxes, which rely on new technology, take years to introduce.

‘A national scheme would avoid a confusing and potentially unfair and contradictory patchwork of local schemes but would be impossible to deliver if this patchwork becomes too vast. The countdown to net zero has begun. Net zero emissions should not mean zero tax revenue.’

Internet link: Parliament website

HMRC has revealed that more than one million taxpayers filed their late tax returns in February – taking advantage of the extra time to complete their self assessment without facing a penalty.

About 12.2 million taxpayers were expected to file a return for the 2020/21 tax year and more than 11.3 million submitted their returns by 28 February.

The deadline for submitting tax returns was 31 January but, this year, HMRC gave customers an extra month to complete it. If customers filed their returns in February, they would avoid a late filing penalty.

HMRC has given customers until 1 April to pay their outstanding tax bill or set up a Time to Pay arrangement to avoid receiving a late payment penalty. Interest has been applied to all outstanding balances since 1 February.

Lucy Frazer, Financial Secretary to the Treasury, said:

‘[The] stats show how vital the extra month was in supporting the cash flows of more than a million self-employed people and businesses across the UK, helping to ensure their survival as we recover from the pandemic.’

Internet link: HMRC press release

The British Chambers of Commerce (BCC) has called for urgent action to help improve trade with the EU.

A survey carried out by the BCC revealed that 60% of UK exporters reported difficulties trading with the EU. The business group said the number of lorries waiting to get into the port of Dover ‘also offers a vivid illustration of the problems continuing to impact the operation of the trade deal between the UK and the EU’.

The BCC has outlined a series of recommendations designed to help improve trade between the UK and the EU. The recommendations include supplementary deals to reduce complexity around food exports, exempting smallest firms from having to have multiple country VAT registration for online selling and a more pragmatic approach to be taken to the enforcement of import customs declarations.

William Bain, Head of Trade Policy at the BCC, said:

‘No-one is expecting goods to flow as freely across the channel now as they did prior to Brexit. But the way the trade agreement is being interpreted in 27 different EU countries is a major headache for UK business – especially smaller firms without the cash reserves to set up new EU-based arrangements.’

Internet link: BCC press release

Reports of scam HMRC phone calls have fallen by 97% over the last 12 months, according to the latest figures from the tax authority.

According to HMRC, reports of scammers impersonating HMRC in phone calls peaked at 79,477 in March 2021 and fell to just 2,491 in December 2021.

The fall in scam call reports to HMRC has also been seen elsewhere with a 92% drop in phishing email reports and a 97% drop in scam text reports over the last year.

This signals that the public is more aware of cyber criminals and the methods they use to trick people.

Mike Fell, HMRC’s Head of Cyber Security Operations, said:

‘We work incredibly hard to protect the public from these criminals who ruin lives by stealing from people. It’s great news that fewer people are receiving and reporting these attempted frauds, but it is still important they continue to report suspicious contact to us.

‘We will continue to do everything we can to protect the public from these cynical attempts to impersonate HMRC to steal from people.’

Internet link: HMRC press release