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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Pursuit: automatic and clerical pursuit: pursuit at the debt management office

An AP for pursuit at the Debt Management Office is normally presented on IDMS. The Pursuit Status on the referred AP is as in the following table

Pursuit status Circumstances
   
LA-ENF (Word 27KB) A further amount has become collectible or an overpayment has arisen on a previously cleared AP which was LA-ENF at the time
PLA (Word 28KB) The Permanent Local Action signal is set to ‘Y’
LA (Word 28KB) All other cases

It is important that there is no unnecessary delay in either the preliminary action or in the start of recovery proceedings. The most effective action must be taken at all stages.

Note: As you will not be advised of all changes which may be made to a company’s record, it is vital that before taking any local action you thoroughly check the company’s record, in particular, the AP you are working.

The remainder of this subject is presented as follows

Amounts suspended
Issue of payment applications
Pursuit before the due date
Automatic pursuit by IDMS
Pursuit by Debt Management Office Tyneside
Pursuit at the business address
Pursuing all outstanding liabilities
Stopping pursuit at the Debt Management Office
Debt management responsibility
Interest
Overpayments and reallocations
Priority for larger cases
Disposal of papers

Amounts suspended

Where part of a collectible amount on an AP has been suspended, the issue of automatic payment applications continues but the amount payable does not include the suspended amount - this amount is shown separately.

When payment application issue finishes, both the collectible and the suspended amount are included in the amount referred for local pursuit.

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Issue of payment applications

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Pursuit before the due date

An assessment can be raised before the due date (Word 49KB). Automatic pursuit does not begin until this date has been reached. However, difficulties may arise where the case is referred for pursuit at the Debt Management Office immediately.

This includes PLA cases and any case which has previously been LA-ENF. The difficulty is only likely to be noticeable for cases where £100,000 or more is collectible, as they will appear on the IDMS Caseworker CT list of £100,000 or more before the company has received the notice of assessment or acknowledgement of self assessment. It is therefore important that part of the thorough check of the company record includes a check of the due date. For more information see COM110100.

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Automatic pursuit by IDMS

In certain cases where there are no existing work items for the same reference, IDMS automatically determines the initial recovery process. Selection takes place either on creation of the work item or, where appropriate, when it leaves the Debt Management Telephone Centre.

Where IDMS has selected the Automatic Enforcement process it automatically issues a

  • Distraint warning letter for England, Wales and Northern Ireland
  • Summary Warrant for Scotland

Every letter is accompanied by a Statement of Liability (Word 27KB) and both are printed centrally. They are sent to the

  • Recovery Address held in IDMS, if available

Or

  • Registered Office address

Where the letter is successfully produced, an Action History is recorded in IDMS showing the date of issue, type of letter, address to which it was issued, the total amount due and the interest included in that total amount. To allow time for case preparation, the work item appears on the appropriate work list for review three days after the issue of the warning letter.

Where a letter cannot be produced because of failure within the Interest Calculator, the following Action History is displayed in IDMS

  • ‘Warning Letter rejected. Interest Calculator failed’

The rejected work item is put on the work list of the caseworker responsible for the proposed enforcement action. It has a next action of ‘Issue Warning Letter’.

A work item does not go into the IDMS Automatic Enforcement process. IDMS refers it for clerical action by the Debt Management Office where

  • There are other work items for the same reference already working at the Debt Management Office
  • The insolvency signal is set
  • The PLA signal is set
  • The Welsh Language signal is set
  • Any information codes (Word 61KB) are set
  • The amount is £100,000 or more

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Pursuit by Debt Management Office Tyneside

Debt Management Office Tyneside deals with new CT debts where the case is classed as ‘clean’. A ‘clean’ case is one where the following apply

  • There is only one outstanding work item in IDMS. The case does not involve clerical interest and the clerical interest indicator (Word 32KB) is not set to ‘Y’
  • The company is not in Administrative Receivership, Company Voluntary Arrangement or Company Liquidation
  • The company has not been struck-off
  • The AP has not been made local action clerically to follow up a query or failure to keep a time to pay arrangement

Debt Management Office Tyneside traces the business address and telephone number of the company where the information is not already on COTAX. They update the COTAX communication address with these details so that future pursuit will take place at the correct address.

Debt Management Office Tyneside take the initial steps in pursuing the outstanding debt in accordance with the REPE process for corporation tax. This process is up to and including the issue of the IDMS 10 distraint warning letter.

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Pursuit at the business address

It is important that pursuit takes place at the most suitable address where payment of the outstanding amount is most likely. This is, in the majority of cases, the business address. The COTAX record can hold up to 3 different addresses

  • The Registered Office
  • A Communication address
  • An Agent’s address

The business address is not always the same as the Registered Office. If this is the case it should be recorded as a communications address using Function ACOM (Amend Communication Address).

Where a business address has not been recorded on COTAX you should always check for a PAYE record and where there is one, look for a business address and telephone number where recovery prospects may be better. This may be the case where demand notes have been issued to the Registered Office and this is the same address as the Agent. To continue pursuing the debt at that address may not result in payment and enforcement / recovery action may not be appropriate there.

Where there is no PAYE record, you should contact the office responsible for the company to obtain the business address and telephone number.

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Pursuing all outstanding liabilities

All collectible amounts working locally for the same company at the same time are to be cross referenced and worked together, see IDMS Good Practice Guide (3).

As IDMS is initially not able to cross reference cases with different reference numbers, you must check Banking Operations records for PAYE and / or SAFE liability. Additionally, there may be other collectible liability which is not yet working LA. The appropriate cross references should then be made using IDMS Function Cross Reference. You should then consider whether linking is appropriate, see IDMS Good Practice Guide (9).

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Stopping pursuit at the Debt Management Office

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Further information on making an informal stand over can be found in COM10070.

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Debt management responsibility

If you have linked several debts, it is possible that collection of different Heads of Duty have been referred to different Debt Management Offices.

Where more than one Debt Management Office is involved, you should consider whether it is appropriate to transfer responsibility to the other Debt Management Office for the following reason

  • You are aware that the company has a further address in another Debt Management Office’s area where recovery prospects are better

Notes: 

1. Debt Management Offices should not transfer periods of responsibilities because IDMS only recognises one Debt Management Office (including Enforcement & Insolvency Service) as being responsible for all unpaid liabilities for a Head of Duty for a particular company.
   
2. Whenever practical, all arrears due from a company which are working locally should be transferred at the same time.
3. You must bear in mind the important principle that in England and Wales, where County Court proceedings may be necessary, a defendant must not be summoned to a distant court.

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Interest

When communicating with the company or agent

  • For a Quarterly Instalment Payment case where the normal due date of the AP has not been reached, you must calculate the net amount of debit interest and include this amount when asking for payment of the tax

Or

  • For all cases where the normal due date of the AP has passed, you must always include any accrued late payment interest to date

In addition, you must warn that late payment interest continues to accrue daily (after the normal due date for the AP) on unpaid amounts.

Note: Where payment of tax only is made in a case working with you, recovery of any interest charge subsequently raised remains your responsibility.

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Overpayments and reallocations

Where an overpayment arises on an AP under pursuit at the Debt Management Office, COTAX automatically deals with the overpayment where the Pursuit Status is LA or PLA. Where the Pursuit Status is LA-ENF, no action is taken and you need to deal with the overpayment.

Where the office responsible for dealing with the overpayment wants to make a reallocation for a case which has been referred for pursuit at the Debt Management Office, that office contacts the Debt Management Office to discuss the matter.

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Priority for larger cases

The Manager, in consultation with the Debt Management Group Office, is to ensure that

  • Cases are correctly selected and presented on IDMS
  • A priority post system is operated

Where a case has a total collectible liability of £5,000 the responsible officer is to ensure that prompt action is taken with

  • Incoming post
  • Approaching the company by letter, telephone or personal call

And, where there is no satisfactory response

  • Recovery locally or reference to Enforcement & Insolvency Service

For cases with a total collectible liability of £20,000 or more see COM110100.

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Disposal of papers

When an AP no longer has a Pursuit Status of LA, LA-ENF or PLA, the cleared papers are filed and retained for one year.

For a list of functions to use in particular situations, see COM110091.

For legislation applying to this subject, see COM110092.