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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: setting the charge on record

Once you start proceedings for an interest-bearing computer charge, you may be responsible for putting the interest charge on record manually, depending on the type of debt. When you do so depends on the type of proceedings taken.

When you take court proceedings which include interest bearing charges you can only enforce the amounts of interest the court orders and you will therefore need to make interim calculations to the date you start each action, and the date the court enters judgment or orders payment.

Do not raise an interest charge when you are starting proceedings. On HoD systems, other than SA, COTAX and SAFE, raise interest charges manually when payment in full has been made.

For distraint cases, although you may need to provide interim calculations at various stages in the case, do not raise an interest charge until payment in full has been made.

Click on the links below for details of how and when to set the interest charge on record.

 

Schedule D Legacy cases

Where the interest code is 1 and the interest exception indicator is not set, an interest charge will be raised automatically when payment in full is made. Otherwise, an exception report will be generated when final payment is made.

After full payment is received, use IVT INP507 to create the charge on the computer record. Take further proceedings as necessary for the balance.

SAFE Charges

When the underlying tax is paid, and the enforcement signal on IDMS is set to either C, D, J, L, M, P or S, the case will appear on an IDMS exception list. You do not need to do anything, as SAFE will automatically deal with any interest due.

SA, CTPF / CTSA Cases

For SA, SAFE, CTPF and CTSA cases, interest will be calculated automatically when final payment is made. You cannot raise an interest charge on record. Keep a note of the interest recoverable in the proceedings on the enforcement papers unless the clerical interest signal is set.

‘In-Year’ PAYE proceedings after 19 April and End-of-Year Employer’s Underpayments

If you are taking enforcement action before the P35 is received, you will have used transaction INT to set the Clerical Interest signal automatically to ‘Y’ when you started enforcement proceedings. Keep a note of the interest recoverable in the proceedings on the enforcement papers.

If you fail to set the signal, PAYE interest will be calculated automatically when the ‘228’ signal is set following receipt of the P35.

You are responsible for calculating and charging interest when the tax is paid while the signal is set to Y. You will be prompted to do so after the tax is paid by an IDMS exception report.

Where you have taken county court proceedings (England and Wales only), if the P35 is received after judgment has been entered, the interest included in the judgment is not affected (even where there has been an underlying reduction in the tax).