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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Pre-enforcement: interest in enforcement proceedings: dates to and from which interest is charged

Interest warning

You should always warn the debtor that interest accrues from the due date until payment.

Interest in proceedings

Always include the accumulated interest in any proceedings you take to recover unpaid duty, particularly for court proceedings. Where interest is below the administrative limit you should include it in any proceedings taken.

You will need to make interim calculations in court proceedings entered clerically and include those charges in the enforcement proceedings. The due date for payment remains the same, but the date to which interest is calculated varies depending on the type of proceedings. Interim interest calculations to date of claim and judgment will be made automatically for claims issued through the CCBC.

You can only enforce through the courts the amounts of interest that the court orders and if accrued interest is omitted from the action to recover the parent duty, it cannot be sued for separately.

Recalculation after payment

You will need to recalculate the interest once payment is finally made, and collect any difference between that figure and that claimed in proceedings.

Administrative limits

(This content has been withheld because of exemptions in the Freedom of Information Act 2000) DMBM610070(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Distraint (not Scotland)

Where you take distraint action, for all interest-bearing charges, you should include interest accruing, until payment, in the levy. You should be able to tell the debtor (and auctioneer as appropriate) the amount of interest accruing daily and, at each stage of the distraint, the full amount due including interest accrued to ‘today’. The distraint is not satisfied until the full amount of duty, costs and interest is paid.

County court proceedings (England and Wales only)

Claims filed clerically

You should claim interest ‘accruing until judgment or sooner payment’ on the claim form N1. You will have to calculate interest to the date of the claim and then to the date of judgment, as necessary.

Safeguard your ability to take further proceedings for interest that accrues after judgment by adding

‘The claimant reserves the right to charge interest from the date of judgment until payment and to take further proceedings if necessary to recover such interest’.

For more information on how to express your claim and what to do about interest following judgment, see DMBM665000 onwards.

CCBC

Where proceedings are taken through the County Court Bulk Centre IDMS automatically calculates the accrued interest and includes it in the claim and judgment request.

Summary Proceedings (not Scotland)

You should claim interest on the summons to the date of issue of the proceedings and accruing interest until the order (England and Wales) or sooner payment.

Safeguard your ability to take further proceedings for interest that accrues after judgment by adding

‘The claimant reserves the right to charge interest from the date of order until payment and to take further proceedings if necessary to recover such interest’.

In England and Wales, at the hearing ask for interest to the date of the Magistrates’ Order.

Summary warrant and summary proceedings (Scotland only)

You cannot claim interest beyond the date the proceedings are commenced. That is

  • for summary warrant, the date the recovery manager signs the summary warrant
  • for summary proceedings, the date on which a summons is issued for registration in the Sheriff Court.

You must not start proceedings solely for the purpose of minimising the interest payable.

Ordinary Cause (Scotland only)

Interest continues to run until the date of payment. In ordinary cause proceedings the debt and its related interest are regarded as one cause of action and if accrued interest is omitted from the proceedings it cannot be recovered by separate proceedings.

You should include in your action interest to the date on which an initial writ is issued for registration in the Sheriff Court. Do not, however, raise an interest charge at this stage. Ask the Court to grant decree for the interest calculated to the date the initial writ is sent to the Court for registration and the ongoing interest from that date until payment.