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HMRC internal manual

Specialist Investigations Operational Guidance

HM Revenue & Customs
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Settlement by agreement: means to fund the offer: calculation of forward interest

Forward interest is calculated at a rate of 1% over the rate applied by HMRC to unpaid tax. The calculation is made as simple interest, on the total reducing amount of the offer outstanding.

The calculation of forward interest is always made at the time of the settlement negotiation. The rate that applies at that date fixes the forward interest that will be included in the offer. It is not revised if the underlying rate of interest changes.