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HMRC internal manual

Air Passenger Duty

Penalties/interest and debt management: Statutory interest

Statutory interest is payable by the Department to the trader in certain cases of official error or maladministration. A claim for statutory interest should be processed by the office which made the decision giving rise to the claim.

For APD, statutory interest falls within the scope of the unjust enrichment reimbursement scheme - see APD11000 for details.

Consideration of a claim

On receipt of a claim, which must be in writing, you should record the date of receipt and details of the claim. Failure to process a claim within a reasonable period can give rise to a justifiable claim for additional statutory interest to cover any period of unreasonable delay.

The circumstances of a trader’s claim should be examined thoroughly to establish whether there was official error or maladministration.

If the conclusion you reach is that there are no grounds for the claim, the trader should be advised in writing. An explanation should be given as to why there is no entitlement.

A formal claim should be made by the aircraft operator no later than 3 years after the end of the applicable period to which it relates.

The applicable period - the period on which statutory interest is due

The period on which statutory interest is due, the ‘applicable period’, is defined as “from the date when payment was received by Customs to the date when the payment of the amount on which interest is payable is authorised by Customs”.

From this period you may deduct reasonable enquiry time between the trader being advised of the matters needing clarification and his adequate response. Reminders should be sent to traders who do not respond so that we can evidence that all reasonable steps have been taken to deal with the matter.

You may also exclude from the interest period, the time you take in deciding whether to make any enquiries with the trader.

Calculation of statutory interest

The CAT has a computer package which will calculate statutory interest automatically on input of the period(s) and amounts of APD. The correct rates of interest due are already programmed into the system.

Statutory interest should be calculated on the net amount of air Passenger Duty due to the trader in respect of the “defined period”, had the error or maladministration not occurred.

Refer to APD11300 for the correct procedure to follow for the issue of statutory interest.