Skip to content

ACCA Applied Skills · Taxation (UK) · The procedures relating to compliance checks, appeals and disputes

Iqbal postponed £8,000 of income tax which was due on 31 January 2025, pending an appeal. The tribunal ruled against him and he paid the whole £8,000 on 31 July 2025, exactly six months after the due date. Using the rate of interest on underpaid tax of 8.5% per year, what interest is payable?

Interest on postponed tax runs from the original due date. For £8,000 over six months at 8.5% it is £8,000 × 8.5% × 6/12, which equals £340. Postponement does not stop interest running on tax that is eventually payable.

  1. A£340Correct
  2. B£680
  3. C£300
  4. D£170

Explanation

Interest runs from the original due date, 31 January 2025, even though the tax was postponed. £8,000 × 8.5% × 6/12 = £340. £680 is a full year's interest. £300 uses the official rate of 3.75% for six months. £170 is only three months of interest.

Did you get it right without looking?

One question tells you little. A timed set on The procedures relating to compliance checks, appeals and disputes shows your real accuracy, how long you take and where you lose marks.

Practise The procedures relating to compliance checks, appeals and disputesFree diagnostic mock

More The procedures relating to compliance checks, appeals and disputes questions