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HMRC internal manual

COTAX Manual

HM Revenue & Customs
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Interest: interest demands and statements: introduction

Payment applications issued by COTAX for payment of mainstream CT or penalties for APs ending on or after 1 October 1993, show under the heading of ‘Interest due’:

  • the total amount of late payment interest charged on tax paid late
  • plus any debit interest due on any quarterly instalment payment (QIP) cases paid late
  • any accruing late payment interest on any tax still collectible.


1. Payment applications are not issued automatically for companies within a Group Payment Arrangement until the payments have been apportioned between the companies in the group. See COM96000 for more information.
2. COTAX does not calculate interest on tax that is stood-over or suspended.

Notices of assessment and penalty determinations show the total late payment interest accrued to date except where the Clerical Interest Indicator (CII) is set to ‘Y’.

When charging or amending interest automatically, COTAX does the following.

For an AP that is not subject to Clerical Pursuit:

  • starts a new cycle of payment applications for the interest where no tax or penalty is outstanding (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • does not start a new cycle of payment applications where tax or penalties remain outstanding. Any charged or accrued interest is automatically included on subsequent applications for payment.

For an AP subject to Clerical Pursuit:

  • it leaves the AP working with the Banking Operations Office or Debt Management Office.


1. COTAX charges late payment interest automatically until the tax liability has been paid in full.
2. Credit and debit interest is not calculated automatically until the normal due date (Word 49KB) has been reached, the return has been received and the self assessment recorded.

Function DPUR (Display Pursuit Action) displays for each payment application issued by COTAX:

  • the type of application. See COM110000 for more information
  • the date the application was issued
  • the total amount outstanding, including the unpaid interest at that date.

Once an interest charge has been raised or amended using Function RMIC (Raise Manual Interest Charge), COTAX does not allow you to:

  • amend the Pursuit Status
  • set the Clerical Interest Indicator (CII) to ‘N’ when you have raised a late payment interest charge
  • set the Credit / Debit Interest Indicator (CDII) to ‘N’ when you have raised a credit or debit interest charge.

Where late payment, credit or debit interest has been raised or amended manually using function RMIC (Raise Manual Interest Charge), the Banking Operations Office or Debt Management Office have to issue payment applications for any outstanding liability clerically. See COM110000 when you need to do that.

You can issue an interest statement to the company, agent, or both using Function IINT (Issue Interest Statement). An interest statement cannot be issued to an overseas address.