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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Interest: Interest Review Unit (IRU): Income Tax Self Assessment (ITSA): claims to reduce

A customer (or their representative) can make a ‘claim to reduce’ if they believe that the likely final SA amount due for the year will be less than the existing POAs. No matter what the reason for the claim to reduce is, it is the customer’s responsibility to make sure that a claim to reduce the POAs is fitting. HMRC are not allowed to question the accuracy of a valid claim.

Objections to interest are often made when the POAs are restored at a later date to a higher figure and interest is charged from the original due dates. In most cases this is noticed only when the tax return is dealt with. Customers hardly ever modify a claim after the POAs have been first reduced. In these cases the objection should be resisted and the interest charge upheld.

If any of the examples below occur, the facts should be considered to see whether HMRC actions have resulted in the customer unfairly incurring an interest charge. The actions taken to sort out the situation will depend on whether the customer opted to self calculate the tax or if it is a HMRC calculation case.

  • An invalid claim to reduce is accepted, for example the claim was not in writing (with the exception of those made by phone to a contact centre).
  • The customer argues that no claim was ever made, and there is no trace of the claim.

For HMRC calculation cases

Where the customer was aware of how much to pay, for example a notice showing the correct amount due was issued, before the flawed claim was dealt with, then no change to interest is needed. If the customer did not receive a notice showing the correct amount due, before the incorrect claim to reduce was handled, the interest should be recalculated from 30 days after a notice of the correct amount due was sent. The excess interest should be given up.

In self calculation cases

The customer is fully aware of how much to pay and should always make sure they pay by the legal due dates. This is regardless of any HMRC delay or mistakes. Because of this giving up interest due will not be considered.