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Post questions here regarding the use of the Late Payment Legislation

Late Payment Penalties / Self Assessment / Corporation Tax

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6 years 2 weeks ago #1817 by Schnurdle
Hi,

I have two questions about the Late Payment Penalties; one from the creditor's point of view and one from the debtor's.

1) Do the Late Payment Penalties (and interest) count as Income for Self Assessment purposes?

2) Do Late Payment Penalties (and interest) count as Legitimate Business Expenses which can offset Corporation Tax?

Best regards,

Schnurdle

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6 years 2 weeks ago #1818 by David J
Hello Schnurdle

I copied the below from our fAQ page. I'm not sure if this help and if not please let me know and I will see if I can get a definitive answer.

Best regards

David

From the FAQ page:

How do I record late payment interest and compensation in my accounting records for tax purposes?

Late payment interest and compensation are chargeable as 'interest received' (for the late payment interest) and 'other income' (for the compensation received) within the accounts.

Both the late payment interest and compensation are taxable as they are derived from extra costs which you may have incurred.

For any payments that are made, these would be recorded as interest charged within the accounts.

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