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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE RTI: late-payment interest

Interest for 2012-13

There is no interest on any late-paid RTI amounts. The interest on these work items has been suppressed.

Interest for 2013-14

Interest is charged on late-payment of month 12 only, with a reckonable date of 19 April 2014.

Interest for tax year 2014-15 onwards

From April 2014, for tax year 2014-15 onwards interest is charged in year. ETMP automatically calculates and raises interest separately for late payment of:

  • RTI PAYE and specified charges
  • CISR and CIS specified charges
  • Late payment penalties
  • Late filing penalties
  • CL1A charges
  • advance charges (this is currently suppressed)

Interest is calculated from the due and payable date to the date of payment or credit.

For RTI/CIS, CL1A and EYU charges, interest is charged from:

  • 19th of month/quarter for all cheque payments
  • 22nd of month/quarter for all electronic payments.

For penalties, interest charged from the relevant due date of the penalty charge.

Where an interest-bearing charge is paid late, ETMP automatically calculates and raises interest, except where the ‘Clerical Interest’ signal is set or the scheme is exempt from having interest charged (a signal will be set on relevant schemes).

ETMP shows accruing interest until the charge is paid in full.

Interest charge notices

Interest charge notices are issued from ETMP.

The table below details the reference and name of the charge notice.

Reference Description Issued
RTI514 Late-payment interest charge notice For Income Tax/NIC and/or CIS (separate charge and notice for each in a PSC scheme case) above £32.00
RTI515 Interest on late payment of Late Filing penalties When a late-filing penalty is paid after its due date
RTI516 Interest on late payment of Late Payment Penalties When a late-payment penalty is paid after its due date
RTI517 Interest on late-payment - amendment to charge When the interest charge is amended.
RTI518 Interest on late-payment - cancelled charge When the interest charge is discharged in full.

When RLS is:

  • set, interest is still raised but no charge notice is issued to the employer; the charge is sent immediately to IDMS to enable tracing to commence
  • unset, the interest charge notice is issued to the employer and an update sent to IDMS.

When the interest charge is recalculated

Unless the ‘Clerical Interest’ signal is set, the interest charge is automatically recalculated in the following circumstances.

Where:

  • the parent charge is increased from an amendment,  the original interest charge is cancelled and a new interest charge is raised because there will be more interest due
  • the parent charge is reduced as a result of an amendment, the interest is amended to the correct amount of interest due
  • the charge is cancelled, the interest charge is cancelled as there is no tax to pay
  • a payment or credit is unallocated from the parent charge, the interest charge is cancelled because the parent charge is no longer cleared
  • there is a dishonoured payment, the interest charge is cancelled because there will be more interest due once the charge is paid in full.

In these cases, ETMP will issue either an RTI517 (amended interest notice) or RTI518 (cancelled interest notice).

Setting the Clerical Interest signal

You should set the Clerical Interest signal when you do not wish ETMP to automatically raise an interest charge; for example, in a complaint case.

You can set a ‘Clerical Interest’ signal by applying an Interest Lock type ‘C’. To do this, refer to ETMP Helpcard 13a (public folder) for Set Locks and B/F Payments.

Once set, when ETMP is due to raise or amend an interest charge, no charge is raised or amended. When setting the clerical interest lock, it is imperative to leave a concise note on ETMP why the signal was set.

When unset, ETMP starts to automatically raise any interest due.

Changes to the IDMS Interest Calculator

From April 2014, there are different rules relating to the charging of interest dependant on the tax year the charge relates to. The IDMS Interest Calculator has been enhanced to take the different rules into consideration when calculating accruing interest.

For tax year:

  • 2012-13, there is no interest on any late-paid RTI amounts; interest on these work items is suppressed so the Interest Calculator does not calculate any accruing interest
  • 2013-14, interest is charged on late-payment of month 12 only; the Interest Calculator only calculates accruing interest on amounts with a reckonable date of 19/04/2014
  • 2014-15, interest is charged in-year on amounts overdue after the reckonable date of the charge.
Charge Reckonable date Explanation
RTI, Advance and CIS specified 19/MM/YYYY MM: month payment dueYYYY: tax year
Non-RTI underpayment 19/04/YYYY YYYY: tax year
EYU 19/04/YYYY or month of cessation YYYY: tax year
CL1A NICs 19/07/YYYY YYYY: tax year

ETMP

All interest charges will be raised on the same contract account as the charge to which they relate.

Late payment interest charges do not attract interest.