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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: coding out: Self Assessment (SA) and Tax Credit (TC) overpayments: further SA points: interest

Where a debt has been sent to NPS(PAYE) for coding out, interest will:

  • be charged, where appropriate, after NPS(PAYE) reconciliation when the payment has been collected and sent back to the Head of Duty (HoD) system
  • continue to accrue from the original due date of the debt until 6 April in the year in which the debt is coded, on any amount collected.

Example of interest dates for an SA debt

SA debts selected for coding out campaign in November 2011.

Tax year 2009-10

First payment on account due 31 January 2010 £500
Second payment on account due 31 July 2010 £500
Balancing charge due 31 January 2011 £400

Interest charge dates

First payment on account 31 January 2010 to 6 April 2012 £500
Second payment on account 31 July 2010 to 6 April 2012 £500
Balancing charge 31 January 2011 to 6 April 2012 £500

Any amount that is not collected from the code will become collectible, and interest will continue to accrue from the ‘original’ due date to the final date of payment.

Interest objections

The IDMS99 issued to the taxpayer clearly explains the impact that coding out has on interest charges; copies of the IDMS99 are available prior to the campaign on the DMB Campaigns site (select Campaign plans then the appropriate SA campaign).

Although we will have selected the debts for coding some months before the start of the commencement of coding date, interest is due from the original due date to the date we start collecting the debt (for example, 6 April 2012). We will be collecting payments throughout the tax year (for example, 2012-13) so the taxpayer has had the benefit of an early Effective Date of Payment (EDP) for any amounts collected.

If reconciliation takes place and we have been unable to recover the full amount of the debt through the taxpayers code, any balance collectible will accrue interest from the original due date until the date of payment.

You should follow the existing guidance in DMBM404000 to deal with interest objections.