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HMRC internal manual

Debt Management and Banking Manual

DMBM560335 - Debt and return pursuit: foreign cases: Mutual Assistance in the Recovery of Debt (MARD) (OECD and DTA): requests for reimbursement of costs


Normally, the requested country will not charge the applicant country for costs for taking recovery action. However, where the requested country has incurred recovery costs for a tax or duty debt, such as court costs, but has been unable to recover these costs from the debtor, it may deduct any outstanding costs from any payments it has recovered and only remit the balance to the applicant country.

In addition, whether either :

  • recovery means the costs are likely to be disproportionate or extraordinary; or
  • recovery action is deemed unfounded

both countries may agree for the applicant country to pay the recovery costs / losses of the requested country, if they can’t be recovered from the debtor.

Extraordinary or disproportionate costs

If the requested country anticipates that it will incur extraordinary or disproportionate costs in recovering the applicant country’s debt, it can ask that other country to agree to reimburse these costs if they cannot be recovered from the debtor. It should seek to get this agreement before costs are incurred.

Extraordinary costs are defined as those incurred when a particular type of procedure, which is not ordinarily used in the requested country, is used at the request of the applicant country, or supplementary costs of experts, interpreters, or translators. In some countries it may also refer to costs of judicial and bankruptcy proceedings. However, in the UK we treat the costs of insolvency proceedings as ordinary costs.

‘Disproportionate costs’ are those costs which are disproportionate to the amount to be recovered.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)


Action deemed to be unfounded

A requested country can ask the applicant country to reimburse costs incurred where the claim or the IPE were later found to be invalid.

Action is not considered unfounded, however, where claims were valid when the request was made but only after the receipt of new information from the debtor, prove to be unfounded.

Requests to other countries

Write to the applicant country to explain why you consider the action was unfounded and to request reimbursement of costs or losses.

Requests from other countries

The applicant country will write to you explaining why they consider the action was unfounded.

If you think the action was not unfounded, respond to their request advising that we don’t accept liability to reimburse their costs. Explain why the action was not unfounded.  You may wish to discuss the case with MIPS before you respond.

If you think that the action was unfounded, discuss the case with Operational Policy International Debt first. They will review the case and liaise with (This content has been withheld because of exemptions in the Freedom of Information Act 2000) as appropriate.  They will also provide you with instructions on how to proceed.