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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Interest: handling interest objections and enquiries: DTO action: general considerations

You should only deal with an interest objection if the case is working with you; this may mean transferring work ownership to your office.

There are many things to consider when you are handling an interest objection locally.

If there appears to be no HMRC mistakes or unreasonable delay, you should uphold the interest charge and fully explain why it is correct. Do this only once, and if the customer persists with their objection, submit the papers to the IRU for review.

If, having reviewed the case, you believe there has been an HMRC mistake or unreasonable delay that has affected the interest, you should submit the papers to the IRU for consideration.

In legacy Schedule D and CT cases, and other types of charge on the IRIS system, if the charge is raised incorrectly for example the wrong effective date of payment is used or the amount on which it is based has reduced, you may amend the interest charge clerically (DMBM404180).

Reviewing the case

In the process of dealing with the objection, you must:

  • establish the facts
  • remain courteous and tactful at all times bearing in mind that the customer may feel aggrieved
  • adhere firmly to statutory interest provisions explaining that, where necessary, HMRC does not have the discretion to vary them
  • maintain the interest charge where the charge is correctly raised
  • be alert to the specific areas of objection.

Is the interest charge final?

Does a final interest charge actually exist yet? Although interest will appear on the record, it won’t be final until the customer has paid all of the related underlying tax. Tell the customer that you can’t look into their concerns until they have paid the tax and the full extent of the interest is known. This will apply even if it’s just a few pence tax that hasn’t been paid. For registered complaint cases, the case may be reviewed before the interest is final.

Interest charge under £100

In CT and PAYE cases the IRU will not accept submissions where the interest is under £100. These cases should be dealt with locally; please see DMBM735070.

Customer’s concerns

Consider why the customer is unhappy about paying interest. Look at their concerns and decide if HMRC has made mistakes or not moved the customer’s tax affairs along for long periods. But look for evidence that they knew tax was, or was likely to become due that they could have made payment on account against.

Period to review

When considering interest, focus on the period from the date interest started running, to the date that the tax was paid. Any actions that happened before this period are unlikely to have caused interest to build up. But look for anything that may have ‘pushed’ the customer into paying late. Actions that happened after the tax is fully paid are irrelevant.

Reallocating payments

Don’t move tax payments around retrospectively to reduce interest, unless it was HMRC who put payments to the wrong liability in the first place, or our mistake caused payments to move from their original destination.

Due dates and effective dates of payment

These should not be changed just to remove an interest charge.

The IRU can’t change a due date or effective date of payment (EDP) for you. You should check that the date used is in line with your instructions and if not, amend any wrong ones.

Only where your own processes don’t allow you to update this information, should you send the case to be considered.

Direct cause of interest

Was a HMRC mistake the direct cause of the interest charge? For example, where a customer gets an unexpected tax bill that arose through a HMRC mistake and asks for time to pay the arrears. We can’t give up interest on the time to pay period as it was the customer’s decision to pay in that way that caused the interest, not the underlying tax mistake.

Unreasonable delay

Consider how complex or difficult the underlying tax matter was to resolve. We would expect to settle straightforward matters more quickly than complex or contentious ones. But each case is different and you should weigh up the facts to decide whether or not there is unreasonable delay.

‘S’ assessments, legacy Schedule D and CT cases

If you receive an interest objection on the grounds of mistakes or unreasonable delay, send it to the IRU immediately.