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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Enforcement action: country court proceedings: the defendant’s response to the claim: interest disputed

Interest is a statutory charge and accrues until the associated tax/NIC is paid. It does not stop when county court proceedings are begun.

Interest is initially calculated when a claim is made and included as part of the claim. It is recalculated at the entry of judgment and the revised amount is included in the action. Interest from the date of judgment is still accruing though it is not included in the action, though we reserve the right to claim any interest that accrues from judgment to the date of payment in a later action.

Some common types of defence against interest are in the table below.

Defence What action to take
   
Payment(s) made earlier than the date(s) shown in your claim Consider whether the EDPs are correct

If you cannot disprove the defence:

  • accept it
  • recalculate the interest
  • seek payment of any remaining interest plus revised fees and commencement costs
  • amend the commencement costs to reflect the lesser amount payable as necessary
  • treat the excess fees as irrecoverable.

If you obtain payment, inform the court that you have accepted the payment in settlement of your claim, otherwise advise the court of the reduction to your claim and that you will seek judgment of the reduced claim at the hearing.

If, exceptionally, your claim was solely for interest and recalculation extinguishes the debt you should formally discontinue the proceedings.    
  Payments have been wrongly allocated Investigate the facts but do not reallocate payments without good reason. 
  Disputes reckonable date(s) Check that interest has been calculated correctly.

Consult the Interest Review Unit in cases of difficulty.

Make sure your reply to the defence explains why interest has been charged from the date(s) shown.

When dealing with a defence that disputes the date interest has been charged from, you may have to explain the difference between the

Whilst you should explain the difference in plain English, you will nevertheless have to quote the relevant legislation to satisfy the court.