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HMRC internal manual

Debt Management and Banking Manual

Interest: interest on late payments: overview

This section of the DMBM sets out the rules and principles to be applied when calculating and charging interest on late payments. It takes into account legislative requirements and operational practices. These have been built into the IT systems that support the banking, accounting and debt management business processes (see DMBM402000). These systems, which have been introduced over a number of years, reflect the technology that was available at the time and consequently provide varying degrees of automatic handling of interest. Where interest has to be calculated and charged clerically the same rules and principles apply.

The current version of the DMBM covers interest on Direct taxes. Many of the rules and principles apply to both Direct and Indirect taxes but confirmation of those applying to Indirect taxes will be provided in a later update of this guidance.