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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Interest: how interest is calculated: quarterly instalments - anti-avoidance provisions (Action Guide)

To raise a debit interest charge for a quarterly instalment payment anti-avoidance case consider steps 1 - 10 below.

1. Use function DAPD (Display AP Details) to check that the ‘quarterly instalment payment’ signal is set to ‘Y’. Where it isn’t, contact the Technical Caseworker and ask them to set it.
   
2. Use function RAPP (Revise AP Details) to set the ‘credit / debit interest’ indicator (CDII) to ‘Y’.
3. Use function DINT (Display Interest Computation) to view the current credit or debit Interest calculation. You may wish to take a print of the calculation.
4. Locate an accrual where debit interest has been calculated.
5. Using a calculator:
  * gross up the ‘interest accrued’ to include the amount of the anti-avoidance charge. Example 1 (Word 31KB) illustrates a case
  * use the following formula to calculate a new ‘computation amount’. Use the grossed ‘interest accrued’ in your calculation. use the rate of interest and number of days from interest accrual you chose.
Interest accrued X 100 X 366
         
-–-–-–-–-–-–-–       -–-–-–-—-
Rate of Interest       No of days
  COTAX cannot perform this calculation.
   
6. Use function CINT (Compute Interest) to check that the new computation amount will give the correct answer to include the anti-avoidance charge.
7. If the calculation does not give the correct result check the calculation. If the result is still incorrect use another accrual where debit interest has been calculated and do the calculation again.
8. Where the correct result still cannot be reached contact the COTAX Business Help Desk (This content has been withheld because of exemptions in the Freedom of Information Act 2000)  for advice.
9. Where the calculation gives the correct result use the new computation amount in function RMIC (Raise Manual Interest Charge) to amend the debit interest charge.
10. Advise the Technical Caseworker that the charge has been raised.