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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: interest in enforcement proceedings: proceedings for PAYE/NIC after the end of the tax year

For the years 1992-93 onwards, interest on PAYE/NIC end of year underpayments runs from 14 days after the end of the tax year to the date of payment.

‘In Year’ proceedings extending after 19 April

When you begin enforcement proceedings for PAYE/NIC deductions for a year that has now closed, you should always include interest, even though you may not yet have received the P35. It is particularly important to include accrued interest in court proceedings, because if interest is omitted from the action to recover the parent duty, it cannot be sued for separately afterwards.

Forms P101 issued for periods that include the month ending on 5t h April contain an interest warning.

P35 processed before proceedings have started

If form P35 has been received but not processed before you have started proceedings, it may be preferable to ask the Employers Section to process it quickly, so that BROCS can calculate any parent duty underpayment and the related interest automatically. PAYE interest is calculated automatically when the ‘228’ signal is set following receipt of the P35.

P35 processed after proceedings have started

Where you have started proceedings for PAYE/NIC after the year-end and included interest, you should set the clerical interest signal. If the P35 is then processed an exception report is generated to prompt you to review the debt and interest. Where your proceedings are based on a P101 the next action you take will depend on the stage you have reached in the enforcement process

  • if you have levied distraint but not yet completed it by sale, continue with the distraint for the original amount
  • if you have obtained a magistrates’ order, continue the action for the original amount
  • if you have entered judgment in the county court, do not amend the amount of the debt or the interest in the judgment
  • if you have not entered judgment or obtained a magistrates’ order, amend your claim.