Bringing proceedings against late payment interest charged | Deloitte

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Bringing proceedings against late payment interest charged

If a payment has been made following a tax assessment, the tax collector may send a written notification specifying which part of that payment is allocated to late payment interest due. This is a decision that is open to objection.

13 December 2017

Exceeding term of payment

If they exceed the only or last term of payment applicable to a tax assessment, tax debtors are charged late payment interest on the outstanding amount of the tax assessment. The interest calculated is based on a simple interest rate as from the day after the tax assessment has become due up to the day of the payment. The interest rate is linked to the statutory interest on non commercial transactions but it is at least 4%.

Tax debtor are likewise charged late payment interest if they have been granted an extension of payment. Nevertheless, the Collection of State Taxes Act 1990 includes a number of exceptions to this basic principle. One of those exceptions is that no late payment interest is charged if an extension of payment has been granted for protective assessments in respect of pensions and annuity entitlements or shares constituting a substantial interest.

Ambiguity

The above rules would seem to be clear and yet they harbour a nasty problem. The interest calculation continues up to the day of payment, so the late payment interest due can only be determined afterwards. Hence, tax debtors have no certainty about this beforehand. They will have to estimate this for themselves the best they can. The problem is compounded by the notifications sent by the tax collector. The included breakdown of the amount still due is often opaque (tax, interest or costs). On top of this, a legal remedy reference is often lacking, even though the late payment interest due must be determined through a decision that is open to objection.

Legal remedy reference

Recently, the Supreme Court ruled that if the tax collector sends tax debtors a notification specifying which part of that payment is allocated to late payment interest due, this is a decision that is open to objection. Such notification thus forms an opportunity for tax debtors to bring proceedings. As a result, they can dispute the amount of late payment interest charged. Should tax collectors fail to include a legal remedy reference, then the consequences will be for their account. What this basically means is that tax debtors are excusable if they exceed the objection period, unless they had been otherwise knowledgeable about the period within which they had to file an objection.

The Court of Appeal involved had ruled that the notifications sent by the tax collector had not been open to objection and thus it had wrongfully declared the legal remedies instituted against them to be inadmissible. This is why the Supreme Court refers back the case - partly to the tax collector so a decision on the objection is as yet taken, and partly to a another Court of Appeal.


Source: Supreme Court HR 8 December 2017, 17/00447, ECLI:NL:HR:2017:3084

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