Part 2Unauthorised payments

Chapter 2Top-up payments and excess amounts

Excess amounts: repayment interest

8.—(1) A scheme administrator is entitled to repayment interest if an excess amount that can be reclaimed is recovered in accordance with regulation 7.

(2) If an excess amount cannot be reclaimed, a scheme administrator is only entitled to repayment interest when an excess amount is recovered in accordance with regulation 7 to the extent that it does not exceed the remaining amount of the relevant charge, after any excess amounts have been offset against it.

(3) If a top-up payment has been made in respect of an individual, a scheme administrator is only entitled to repayment interest if it is included it in a return relating to the excess amount.

(4) Repayment interest on an excess amount is to be calculated by applying the prescribed rate to the excess amount for the period—

(a)beginning with the later of—

(i)the 31st January following the tax year in which the historic payment was made, and

(ii)the day on which the relevant charge in respect of the historic payment was paid to HMRC, and

(b)ending with the later of—

(i)the day on which a top-up payment is made under the Chapter 1 scheme in respect of the same individual, and

(ii)where an excess amount is reclaimed, the day on which HMRC makes a payment in respect of that amount to the scheme administrator.

(5) A person is not entitled to interest, or an amount equivalent to interest, in respect of the recovery of an excess amount otherwise than in accordance with this regulation.

(6) In this regulation “the prescribed rate” means the rate applicable under section 178 of the Finance Act 1989 (setting of rates of interest)(1) for the purposes of section 824 of the Income and Corporation Taxes Act 1988(2).