IHTM31753 - Assessing: deposits: more than one calculation

Where:

• two or more calculations are made at the same time, and
• there is interest due on each,

the general rule is that you should apply the deposit against tax first and then against interest charges.

Example

Two calculations are being issued on the free estate

• one for Non-instalment option property (NIOP) (IHTM31012); tax £2,000, and
• one for Instalment option property (IOP); tax £1,000.

Interest is running. The taxpayer placed £3,000 on deposit, but after the due date.

NIOP

The interest to the date of deposit is £60 so the total tax and interest due is £2,060. Deducting £2,000 on deposit leaves £60 to pay.

IOP

The interest to the date of deposit is £30 so the total tax and interest due is £1,030. Deducting £1,000 on deposit leaves £30 to pay.

Interest has been restricted on both calculations since the amount of the deposit (£3,000) exactly matches the tax due.

If the deposit only partly covers the tax due

If the taxpayer or agent has not given instructions on how the deposit should be used, apply it in the way which would be most beneficial for them.

If you are assessing IOP only

• apply the deposit firstly against ordinary IOP, and then
• against any IOP (WIR).