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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: PAYE: introduction to PAYE: interest: discharging interest

Interest is discharged by the owning Debt Management TO where:

  • PAYE has been withdrawn from a distraint (in Scotland, Summary Warrant) and Court Proceedings are not being started within 14 days
  • there is a shortfall of PAYE following sale of distrained (in Scotland, poinded) goods
  • you receive an objection to an interest charge and, on examination, the charge is found to be incorrect
  • you receive or obtain information, other than through an objection, about an interest charge and on review it is found to be incorrect.

Before interest can be discharged, form AZ63 should be completed and authorised. This form can be found and printed off for completion from SEES Forms and Letters under AZ63.

Completion of AZ63

This form is used to authorise the discharge of interest.

Complete sections A and B and on section:

  • C1, show the amount of interest charged
  • C2, show the correct amount of interest
  • C3, show the amount of interest you calculate to be discharged (after using BROCS INT F2 (HP) to recalculate interest by amending the VALUE DATE as appropriate)

and attach a print from BROCS of:

  • all postings on record (using VTP F3 (PS))
  • the computation screen (using INT F4).

On completion, submit form AZ63, BROCS screen prints and any relevant papers to the authorising officer, usually Higher Office grade.

Action by authorising officer

Authority must not be given to discharge interest which has been properly charged and correctly calculated. If the interest is properly charged, it must either be maintained or the case submitted to the Interest Review Unit.

If discharge is appropriate:

  • authorise the discharge and repayment, if appropriate, on AZ63
  • detach AZ63A and keep in a secure file to be checked against the BROCS security listing
  • return the papers to the submitter together with top copy AZ63.

Action when authority for discharge given

In all cases:

  • use BROCS DIS F1 (DI) to record the discharge on BROCS
  • send a letter of explanation to the employer
  • continue collection for any balance of interest remaining outstanding.

If the discharge creates an overpayment which the employer has requested to be repaid or re-allocated:

  • use BROCS RBO to move the overpayment to OAS
  • send a memo to Banking giving the repayment/re-allocation details.

If the employer has not requested that the overpayment is either repaid or re-allocated

  • re-allocate to the current PAYE year
  • advise the employer accordingly.