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HMRC internal manual

Debt Management and Banking Manual

Interest: Interest Review Unit (IRU): General principles: Overview

The Interest Review Unit (IRU) is a specialist team handling objections to paying interest charged under the relevant sections of law dealing with individuals; partnerships; companies; employers and National Insurance contributors.

Central Policy-Tax Administration Policy (CP-TAP) gives the law and policy overview for the guidance and the way in which we apply our responsibility for care and management under Section 5 Commissioners for Revenue and Customs Act (CRCA) 2005.

The terms under which interest is charged are well defined.

  • There is no scope for cancelling correctly charged interest.
  • There is no automatic right to have the amount of interest due reduced or given up. Where the charge is legally correct, HMRC is entitled to recover payment in full, regardless of the circumstances.

Unlike most commercial debt, the sums HMRC seeks to collect are due under law and not as a result of a contract between two parties. All taxpayers are expected to make full payment by the due date. Charging interest is simply our way of recognising that tax has been paid later than when it was due. As a result the scope for setting aside interest on late payment is not as wide as it may be in a commercial setting.

However the IRU will look at the facts of every interest objection passed to them in a fair and impartial manner. They will only look at cases where a customer or their representative has made an objection to the interest charge in writing or over the phone. A case will not normally be considered before the underlying tax has been paid and the interest charged.

Objections sent direct to the unit are not accepted. Customers or their representatives should make their objection to the appropriate local office that handles their affairs.

In most cases, the nature of the objection and the associated evidence will be clear at an early stage and will be covered in this guidance.

Some cases will need special attention, and care will be taken to give every case the proper consideration. The key principle is that giving up interest is based on the fact that HMRC error or unreasonable delay financially disadvantaged the customer by

  • making an interest charge that would not otherwise have had to be paid or
  • increasing the amount of a interest charge that already existed or was building up.

Where necessary all relevant papers and reports will be reviewed by the IRU to enable a reasoned judgement based on the facts of the case.

A decision will not be influenced by a customer’s persistence or willingness to complain. It will be based on the facts alone.

Interest that arose because a customer failed to meet their statutory duty will not normally be given up. Customers are responsible for making sure their tax affairs are in order if an interest charge is to be avoided.

Claims that HMRC error or unreasonable delay has caused, or added to the build up of interest will be carefully examined. Where the facts prove the claim we will consider giving up part or full.

Any continued claim for the interest charged will be in line with the law. The overall aim of looking at the case is to make sure that the individual customer is being treated fairly, while taking account of the wider body of customers, the Treasury and the law. The objector will normally be advised directly of the decision. The aim is to avoid drawn out and needless contact. So when upholding interest, a full and reasoned explanation for the decision will be given.

Where a decision has been made to uphold interest, we will consider further representation where new facts not previously looked at are presented. If there are no new facts the case will be closed and the customer advised that the interest remains due.

The decision is not open to being negotiated in order to get a settlement figure. Any relief given is non-statutory and based on the facts. It is calculated to remove only the part of interest that was caused by HMRC error or unreasonable delay and nothing more, and is given only at the IRU’s discretion.

An interest charge arises because of precise conditions. The IRU’s role is to make a judgement on the interest based on the facts presented. A customer will normally be advised to make a complaint to the appropriate Complaints Handlers for appropriate business stream if they continue to be unhappy with HMRC handling of the case.

That team is best placed to look at all the issues involved and respond fully to a complaint. But they have no capacity to overturn or vary the IRU’s decision. They can only answer the various points of the complaint and deal with any other non-interest areas.