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HMRC internal manual

Tax Credits Technical Manual

Statutory Interest: Overpayments

Interest is due on the late repayment of overpaid tax credits if the overpayment arises as a result of fraud or neglect by the claimant(s). If there is no fraud or neglect no interest can be charged regardless of how long it takes the claimant(s) to repay the overpaid credits.

In most examinations you will not have to consider interest on overpaid credits. The award will be adjusted to reflect the findings and any remaining overpayment will be recoverable after the year end. The exception to this is where the overpaid tax credits are recoverable in-year. Where Section 28(6) permits the overpaid credits to be recovered in-year, the due and payable date for the repayment of the overpayment is 30 days after the issue of the revised award notice. If the repayment is delayed beyond this date, then interest is chargeable.

In most enquiries where the overpayment arises as a result of fraud or neglect by the claimant(s) you have to consider interest on the overpaid credits as interest will run from 30 days after the first specified date. This remains the position even if your enquiry is not concluded until some time after the first specified date or was not opened until after that date

You should always check the current rate of interest when calculating interest as interest can change and these changes are not always well publicised.

You can find the current rate of interest on the Intranet - from the HMRC home page click on Library > A - Z > Interest Rates.