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HMRC internal manual

Debt Management and Banking Manual

Payment processing and accounting: irregular payments: payments with conditions attached


Sometimes we receive a payment accompanied by a letter, or an offer of payment over the phone, that attaches certain conditions to the acceptance of the payment. The general aim of the customer is to gain an advantage from the acceptance of the payment by:

  • preventing us from taking any further action or
  • obtaining agreement from us to a normally unacceptable proposal.

The more common types of conditions are where the payment:

  • is less than the amount due and the customer states:

    • that it is in full and final settlement
    • that banking the payment is acceptance of the conditions.
  • clears the tax on the condition that interest is not charged
  • is from a conscientious objector who says their tax payment must not be used to fund, for example, military expenditure.

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Action to take on receipt of a letter and payment with conditions attached

Where we receive such a payment we can bank it and safely ignore the conditions attached provided the office with collection responsibility writes to the customer immediately to advise them that

  • the payment has been accepted ‘without prejudice’
  • the conditions attached to the payment are formally rejected.

Where the payment is from a conscientious objector, and the customer continues to challenge our response you should write to them including the following wording:

“The obligation to pay taxes is a general one. Tax receipts go into a general pool - the Consolidated Fund - and no part of an individual’s taxes can be identified as funding any particular item of expenditure.”

Action to take on receipt of a telephone call with an offer of payment with conditions attached

For the purpose of this guidance a payment is a collective term used for a one off payment, a payment in full within the next 5 days, or a Time to Pay arrangement.

We should advise the customer:

  • the payment is accepted without prejudice
  • the conditions attached to the payment are formally rejected.

Depending on the case we should advise there may be further interest, penalties and/or surcharges.

Other HMRC debts

If the customer suggests that this payment covers future debts or other HMRC debts, you will need to make it clear to the customer that this payment only refers to the debt that has been discussed.

Note: If you do not do this we may be unable to recover other debts.

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County Court Proceedings (CCP) Cases

For guidance on the acceptance of payments with conditions attached in CCP cases, see DMBM665680.

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Interest Objections

For guidance on how to handle an interest objection, see DMBM405060.