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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
Updated
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Debt and return pursuit: Machine Games Duty (MGD): paying MGD and the payment allocation rules

MGD operators can pay the amount due using the payment methods outlined in the How to Pay guidance (HMRC website).

MGD operators can set up a Variable Payment Plan (VPP) to pay the duty. They must do so before the duty is due and access online services to set up the VPP.

A VPP cannot be set up if the duty is overdue, nor to pay penalties and/or interest.

Payment allocation rules

Clearing rules (except for RTI) are as follows.

1. Payment received and contains a recognisable charge reference

  1. The payment exactly meets the value of the amount outstanding (not including any amount S/O and accrued interest) on the charge.
* Post to charge.
* Create interest charge according to interest rules.
  1. The payment is less than the value of the amount outstanding on the charge.
* Post to charge.
* Remission of small outstanding amount will be done by the automatic write-off program.
  1. The payment is in excess of the amount outstanding on the charge.
* Post to charge.
* Create interest charge according to interest rules.
* Clear interest via auto-clearing program.

Any remaining excess payment should then be allocated to charges from those of the same charge type using the following criteria (if no more charges of this charge type or if the payment refers to a taxpayer account go to section 2a).

* Earliest due date
* Oldest charge period
* Oldest creation date

If the above all are same, then sort by ‘Sub transaction’ (in ascending order).

2. Payments received and contains a recognisable taxpayer account reference (rather than a charge reference)

Payment will be allocated to the taxpayer account and reallocated to charges using the following rules.

  1. Allocate to outstanding (not including any amount S/O and accrued interest) interest-bearing charges using the following hierarchy:
* earliest due date
* oldest charge period
* oldest creation date.

If all of the above are the same then sort it by Main Transaction and Sub Transaction.

  1. Allocate to outstanding (Not including any amount S/O) non-interest-bearing charges using the following hierarchy:
* earliest due date
* oldest charge period
* oldest creation date.

If all of the above are the same then sort it by Main Transaction and Sub Transaction.

  1. If the payment exactly meets the value of the outstanding amount:
* Post to charge.
* Create interest charge according to interest rules if amount outstanding on the charge is fully paid.
  1. If the payment is less than the value of the outstanding amount:
* Post to charge.
* Remission of any small outstanding amount will be done by the automatic write-off program.
  1. If the payment is in excess of the outstanding amount due:
* Post to charge.
* Create interest charge according to interest rules.

At this point, the system determines whether there are (other) charges on the taxpayer account. If there are no other charges on the taxpayer account, the excess is marked as unallocated funds on the taxpayer account. Where credits still remain unallocated, they are left in that state on the taxpayer account. If £10 or less, the sum is transferred to POP.