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HMRC internal manual

COTAX Manual

HM Revenue & Customs
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Pursuit: enforcement: introduction

Initial recovery action

A company is expected to pay their liabilities by the due date (Word 49KB). Where this does not happen the initial pursuit of outstanding COTAX liabilities follows the guidance at COM110000 onwards.

Where this is not successful, the liability is referred for enforcement action in the Debt Management office - Recovery Section.

Enforcement action

Enforcement action is always taken by the Recovery Section.

Detailed information on how to conduct the various methods of enforcement is in the Enforcement Office Manual. You should also refer to recent DMB memos and guidelines issued for IDMS before beginning any enforcement action.

A Recovery Section may request another Debt Management Office to carry out a personal call, but ownership of the case remains with the original Debt Management Office.

Credit and debit interest

Credit and debit interest is automatically calculated when the normal due date has passed, a tax charge is recorded and the credit / debit interest indicator (CDII) is not set. Debit interest can only arise on quarterly instalment payment cases. See COM80000 for more information on how to raise a manual interest charge. Where you are recovering a quarterly instalment payment case before the normal due date, you must ensure that you include any accruing debit interest in your recovery actions.

Late payment interest

Late payment interest accrues on all tax liabilities, but not on penalties or interest, from the normal due date until the debt is cleared. You should always ensure that you include any net debit interest and accruing interest in your recovery actions.

Including interest in proceedings

Both debit and late payment interest should be included in any proceedings.

Where the proceedings take place before the normal due date you should calculate debit interest to the date of proceedings using function CINT (Compute Interest). You cannot raise the debit interest charge until the normal due date. Debit interest continues to accrue until the earlier of the following:

  • the normal due date
  • the date the debt is settled.

Where the proceedings take place after the normal due date, you should calculate late payment interest up to the date of proceedings using function CINT (Compute Interest). You should not raise the late payment interest charge on COTAX. Late payment interest continues to accrue until the debt is settled in full. COTAX automatically raises late payment interest once the debt has been settled unless the CII (Clerical Interest Indicator) has been set. If CII is set you must raise late payment interest manually using function RMIC (Raise Manual Interest Charge).

Debit and late payment interest do not stop accruing at the date of commencement of enforcement action or judgement.

Use function DINT (Display Interest Computation) to view any credit or debit interest charge that already exists.

In enforcement cases use function CINT (Compute Interest) to calculate:

  • debit interest or
  • late payment interest.

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Costs are not accounted for in COTAX.