DST64200 - Types of Interest
Credit Interest
Where a payment in respect of a company’s Digital Services Tax liability for an accounting period is made before the due date, the payment carries interest at the applicable rate until the due date from the later of:
- the date the payment is made, and
- 6 months and 13 days from the start of the accounting period.
In all cases, the due date for payment is 9 months and 1 day from the end of the accounting period.
Late Payment Interest
Where a company makes a late payment of its DST liability, late payment interest will be charged between the payment due date and the date the payment is received.
Repayment Interest
Where a payment in respect of a company’s Digital Services Tax liability for an accounting period is found to have been excessive, the company will be entitled to a repayment. The repayment of the overpaid DST carries interest at the applicable rate:
- from the due date or, if later, the date the digital services tax was paid, and
- until the order for repayment is issued.
The due date is 9 months and 1 day from the end of the accounting period.
Example 1
Generic Ltd has an accounting period end of 31 December 2020. Its liability is due by 1 October 2021. The company pays £5m Digital Services Tax on 14 August 2021. Credit Interest is due on the £5m for the period 14 August 2021 to 30 September 2021.
Example 2
Anyco Ltd has an accounting period of 31 December 2020 and a due date of 1 October 2021. The due date is missed and a payment of £2m is made on 18 October 2021. Late payment interest is due on the £2m outstanding payment for the period 1 October 2021 to 18 October 2021.
Anyco Ltd files its DST return on 31 December 2021 and advises of a liability of £3m. The company makes a further payment of £1m on 20 January 2022. Late payment interest is due for the period 1 October 2021 to 20 January 2022 on the underpayment of £1m.
Example 3
Generic Ltd files its DST return on time on 31 December 2021. The return advises a liability of £4m. As the company had paid £5m DST initially, it is entitled to repayment interest on the £1m overpayment for the period 1 October 2021 to the date the repayment is issued.
Where a repayment of digital services tax is a repayment of tax paid on different dates, it is to be treated so far as possible as a repayment of tax paid on a later (rather than an earlier) date among those dates.
Recovery of Interest
Where a company has been paid interest in relation to an early payment or overpayment of DST (or both) then that interest may be recovered from that company if there is a change in that company’s assessed liability leading to HMRC believing that some or all of the interest should not have been paid.
Overpayments of interest due to errors made in calculating interest may not be considered as changes in the company’s assessed liability.