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HMRC internal manual

Debt Management and Banking Manual

Ordinary Cause: Interest in proceedings for PAYE/NIC

Interest on PAYE/NIC end of year underpayments runs from 19 April, (14 days after theend of the tax year), until 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 nowclosed, you should always include interest even although you may not yet have received theP35.

It is particularly important to include accrued interest in court proceedings, because ifinterest is omitted from the action to recover the parent duty, it cannot be sued forseparately afterwards.

Forms P101 issued for periods that include the month ending on 5 April contain an interestwarning.

P35 processed before proceedings have started

If form P35 has been received but has not been processed before you have startedproceedings, you should contact the Employers Section and request that they process itquickly, so that BROCS can calculate any parent duty underpayment and the related interestautomatically. PAYE interest is calculated automatically when the “228” signalis 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 includedinterest, you should set the clerical interest signal. If the P35 is then processed anexception report is generated to prompt you to review the debt and interest.

Remember that as parent duty and interest are regarded as one cause of action you cannotsue separately for any relevant interest charge then raised as a result of the receipt ofa P35.