CCM10440 - Penalties and Interest: Interest on overpaid credits – lump sum letters of offer
If you are inviting a letter of offer this should not normally give the claimant an advantage over someone who does not enter into such a contract.
Examinations
You will only need to consider interest where the overpaid
credits are recoverable in-year – see
CCM8125. Where, immediately following the
end of the appeal period for the revised award notice, you invite a
letter of offer for a settlement payable within 30 days you should
not normally calculate interest, as the amount involved will be
minimal. However, if there is some delay between the date on which
the revised decision notice is received by the claimant and the
point at which you invite the letter of offer you will need to
consider calculating interest.
For example, your notice of revised decision is received on 1
September 2005 showing an overpayment of £3760 is recoverable
in-year. The claimant is very slow in handling your correspondence
and cancels the settlement meeting twice. It is late December 2005
before you obtain your letter of offer and the settlement will be
paid on 1 February 2006. The claimant will have had 153 days to
repay the overpaid credits which is 123 days more than we should
have allowed. If the interest rate is 6.5% the interest charge will
be:
£3760 x 6.5% x 123/365 = £82
If the delay is purely as a result of avoidable HMRC delays it
would not be fair to expect the claimant to pay interest for this
period.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)Interest should only be waived
where the delay is unreasonable.
If you are inviting a letter of offer in which you will allow
the claimant more than 30 days to pay the settlement, you will need
to charge interest. You always disregard the first 30 days from the
date on which they would have received the revised decision notice
as they are entitled to that period for payment. Interest is
chargeable in respect of the penalty from 30 days after the letter
of offer is accepted – see example at
CCM10450. The interest is charged at the
applicable rate for late payment as at the time you calculate your
settlement.
(This text has been withheld because of exemptions in the
Freedom of Information Act 2000)
Enquiries
In most enquiries you will have to consider interest. Interest on overpaid credits is chargeable from 30 days after the first specified date, see CCM11045, until the date on which the credits are repaid. This remains the position even if your enquiry was not concluded until some time after that date or was not opened until after that date. See CCM14330. The exception will be where you open an enquiry shortly after the end of the tax year and you hold the letter of offer by the first specified date. If you allow 30 days for payment the monies will have been repaid by the date from which we charge interest.
