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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Statements: interest calculation: introduction

Late payment interest is designed to cancel the immediate financial advantage for those who pay late over those who pay on time. Interest is always calculated automatically on any interest bearing liability not paid by the due dates.

If an interest bearing liability is overdue, accruing interest is calculated and included in the statement. Once payment is received an interest charge is calculated if that payment is late. There is no lower monetary (de minimis) limit for charging interest.(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

The way interest is handled on taxpayer statements depends on whether the type of statement issued to the taxpayer was a Brought Forward statement, an Open Item statement, or a Simple Statement.

Brought Forward and Simple Statement types of taxpayer statement are broadly similar. The two main differences between the Open Item and Brought Forward / Simple statement types of statement as regards interest, are explained in the table below.

Open Item statement Brought Forward and Simple statements
   
The total of accruing interest is shown separately for each overdue interest bearing charge The interest identified on a statement covers only the statement period. The amount covers all interest bearing charges and can include interest charged
Interest charges are shown as separate items on the statement for each interest bearing charge paid late Interest charges are not shown on the statement. On the Simple Statement, the total amount of interest charged and / or accrued in the statement period is shown as a single summarised amount. Interest for any previous statement period is included in the brought forward total

From August 2006 statements issued to taxpayers are in either Simple Statement or Open Item style. All statements issued to taxpayers from April 1997 to June 2006 use the Open Item style. Pre-April 1997 statements were issued in the Brought Forward style. The statements issued to the taxpayer can be viewed using function VIEW STATEMENT.

Notes:

1. Function VIEW STATEMENT displays all statements in the Open Item style including those printed and issued in Simple Statement format since August 2006, and Brought Forward style before April 1997
   
2. All screen prints of statements and those created using the SEES Statement facility, are also produced in open item format
3. Statements issued in Simple Statement format can be viewed using the online service SA View L & P
(This content has been withheld because of exemptions in the Freedom of Information Act 2000) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

More information about interest is provided in section ‘Interest’ in business area ‘Int/Pen/Surcharge’ (SAM60000 onwards).