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HMRC internal manual

Debt Management and Banking Manual

From
HM Revenue & Customs
Updated
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Summary Proceedings (Sc): Small claims - answering defences: Interest disputed

Reasons for defence

As interest is a statutory charge on unpaid tax/NIC it is unlikely in itself to give rise to a dispute. The most common defence is likely to be a challenge to the actual assessment. There are however three instances which may have an impact on the interest charged; where

  • the defender claims that the payment was made earlier than the date shown on your claim
  • the defender claims that the payment was wrongly allocated and
  • the defender disputes the reckonable date.

In a case where you receive a notice of the defence prior to the hearing you should

  • consider the defence in accordance with the relevant interest provisions
  • check the facts with the defender where necessary – for example the date he posted the cheque
  • contact the Interest Review Unit (IRU) if necessary and
  • try to resolve the matter prior to the hearing.

Where you are unable to resolve the dispute or where you learn only of the defence at the hearing you should deal with as follows:

Claim that payment made earlier than date shown

For a claim that payment was made earlier than the date shown in your claim you should

  • advise the court that

You should then arrange for your papers together with a full report of the hearing to be referred immediately to HMRC Solicitors Office (1st Floor Clarendon House 114-116 George Street Edinburgh EH2 4LH tel. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) ).

Claim that payment wrongly allocated

For a claim that payment has been wrongly allocated you should

  • inform the court that where a payment is received generally on account in the absence of any specific instruction to the contrary it is HMRC practice to allocate it to whatever appears to be to the defender’s best advantage at that time
  • advise them that you acknowledge that circumstances may have changed and in view of the defender’s claim for reallocation you will have to refer to the HMRC Solicitor for advice and
  • ask the court to continue the case (DMBM675100).

You should then arrange for your papers together with a full report of the hearing to be referred immediately to HMRC Solicitors Office.

Reckonable date disputed

For a claim disputing the date from which the interest is charged, explain to the court and the defender how the reckonable date is arrived at by looking at the relevant instructions.

If your explanation is not accepted
 

    • to the best of your knowledge payment was made on the date given in the particulars of claim
    • you accept the possibility that payment may be deemed to have been made on some earlier date and
    • ask the court to continue the case to give you an opportunity to investigate the claim.
 

  * inform the court that where a payment is received generally on account in the absence of any specific instruction to the contrary it is HMRC practice to allocate it to whatever appears to be to the defender’s best advantage at that time
  * advise them that you acknowledge that circumstances may have changed and in view of the defender’s claim for reallocation you will have to refer to the HMRC Solicitor for advice and
  * ask the court to continue the case ([DMBM675100](https://www.gov.uk/hmrc-internal-manuals/debt-management-and-banking/dmbm675100)).

 

  * ask the court to continue the case to allow you to seek advice from the HMRC Solicitor
  * refer your papers together with a full report of the hearing immediately to the HMRC Solicitors Office.