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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Interest: Interest Review Unit (IRU): General principles: Incorrect case specific advice (Misleading information)

A customer may claim that they have been given incorrect advice by a member of HMRC and that this has led to an interest charge, or an extension of the build up period the customer did not expect.

We should not give up interest just because the customer is disappointed or upset by the interest continuing to be charged. Consider giving interest up only where all the following criteria are met.

  • the customer relied on the advice by doing or refraining from doing something as a direct result of the advice
  • to apply the correct statutory position would be so unfair as to constitute an abuse of power (gross unfairness)
  • they would be financially worse off than if the correct advice had been given in the first place.

There will not always be direct or conclusive evidence so a reasoned judgement should be made on the balance of probabilities. The underlying question to be answered is whether the customer will suffer real financial disadvantage if we apply the law correctly?

Where the customer has been told HMRC would not charge interest, or interest already charged would be given up, then the interest should normally be maintained. They will be no worse off financially than if we had told them the correct position in the first place. Where evidence clearly shows that the customer has been given advice that led them

  • not to pay
  • to delay payment
  • to make a reduced payment,

when otherwise they would have paid in full, then consider giving up the interest built up during the period that the customer has been incorrectly advised and the above criteria are met.

If the evidence suggests that the customer would not have paid even without the incorrect advice the interest should be upheld. It was not HMRC advice that delayed the payment and caused interest to increase.

Care should be taken not to confuse a misunderstanding with incorrect advice. Where the evidence shows or suggests the customer has simply misunderstood a situation, there should be no need to consider giving up interest.