COM80030 - Interest: how interest is calculated: clerical calculation of late payment interest

COTAX does not automatically calculate and charge late payment interest (Word 27KB) where the Clerical Interest Indicator (CII (Word 32KB)) is set.

Late payment interest will also not be calculated and charged automatically where

• COTAX is unable to calculate interest correctly on a carry-back (Word 32KB) or for S458 CTA 2010 (formerly S419(4)ICTA 1988) relief

• There is a ‘Date Struck Off’ on the record and that date has passed

For further information on interest where there is a struck-off date on record see the guidance in ‘Striking Off’ in the ‘Pursuit’ business area.

Interest under Section 87A TMA 1970 is not charged on either

• Penalties or interest itself

• Tax which is stood-over or suspended

CIIW (Clerical Interest Indicator) Work List

Cases appear on the CIIW (Clerical Interest Indicator Work List) in Debt Management Offices and the Banking Operations Office where either

• An operator has set the CII and the tax is paid but no manual interest charge has been raised

• COTAX sets the CII automatically, either after a carry-back leading to repayment or reallocation, or where a claim was received under S458 CTA 2010 (formerly S419(4) ICTA 1988)

For more information about these Work Lists see

• Business area ‘Work Lists’
• Section ‘Interest Work Lists’ (COM81000) in this business area

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Raising a manual interest charge

The Banking Operations Office and Debt Management Offices use function RMIC (Raise Manual Interest Charge) to raise or amend a

• Late payment interest charge
• From the normal due date (Word 49KB) for the AP
• To the effective date of payment (EDP (Word 41KB))
• On any tax paid late

Before you amend an interest charge, you must get authority on the appropriate form

• AZ44, 987, IRU1 in Banking Operations

• AZ63 in Debt Management Offices

The form will tell you why the original calculation was wrong.

Note: You do not need this authority if you work in a Debt Management Office and are responsible for lodging the HMRC claim in Insolvency cases.

Function RMIC (Raise Manual Interest Charge) is used to raise or amend an interest charge clerically

• In the Banking Operations Office where the CII is set to 'Y' and the Pursuit Status is

• RFI (Word 31KB) or PRFI (Word 28KB) 

• LA (Word 28KB), LA-ENF (Word 27KB) or PLA (Word 28KB) and COTAX is unable to calculate interest correctly on a carry-back or where S458 CTA 2010 (formerly S419(4) ICTA 1988) relief has been granted

• In Debt Management Offices where the CII is set to 'Y' and the Pursuit Status is LA, LA ENF or PLA

• Except cases where COTAX is unable to calculate interest correctly on a carry-back or where S458 CTA 2010 relief has been granted. The Banking Operations Offices handle the clerical interest calculation in those cases.

Note: Function RMIC is the only interest function that updates the company’s COTAX record.

Function CINT (Compute Interest) is an interest calculator that provides a computation of interest for late payment interest. The interest computation is based on the notional dates and amounts entered on to the screen.

You do not need to enter a company reference and details of the computation do not update the company record.

If you receive an objection to the interest charge, see section ‘Interest Objections and Amendments’ (COM82000) in this business area.

For a list of forms relevant to this subject, see COM80011.

For a list of functions to use in particular situations, see COM80012.

For legislation applying to this subject, see COM80013.