Who says HMRC are vindictive – surely not.
A new section has been added to the Finance (2) Bill of 2015 at the last hour.
A special Corporation Tax of 45% on all payments of restitution interest from 21 October 2015.
Just take the recent case of Littlewoods Retail PLC vs HMRC (2014) EWHC 868 (CH).
In that case HMRC conceded that Littlewoods had overpaid VAT going back to the seventies.
It had repaid the amount with simple interest.
Littlewoods argued that the interest should be compounded and, unfortunately for HMRC, so did the High Court.
The matter is under appeal but how safe do HMRC feel that they are going to win that appeal?
Basically it means a new tax of 45% has been introduced in the Bill and will be applied in relation to overpayment of tax made due to an error in law. It will not apply to normal overpayment interest.