Taxes Consolidation Act 1997 section 259

Alternative amount on account of appropriate tax

Section 259 provides a modified method for calculating interim payments on account of deposit interest retention tax (DIRT) where a financial institution's DIRT liability for a year is less than the tax that would apply to 12 months' accrued interest.

• Where a bank's actual DIRT paid or credited in a year is less than the notional DIRT on 12 months' accrued interest, a modified payment-on-account regime applies on a continuing basis from the following year onwards.
• Interest is treated as accruing from day to day, so DIRT applies to interest as it accumulates regardless of when it is actually credited to accounts or paid to depositors.
• The interim payment on account for each quarter is calculated using the formula: one-third of A − (B − C), where A is the notional DIRT on 12 months' accrued interest to the relevant quarterly date, B is the prior year's actual DIRT, and C is the lesser of B or the prior year's interim payments.
• If the aggregate interim payments fall short of the amount produced by the formula applied to 30 September, a top-up payment must be made within 21 days of that date; any overpayment is carried forward as a credit against future liabilities.