COM80035 - Interest: how interest is calculated: late payment interest: clerical charge (banking operations) (Action Guide)

To raise or amend a late payment interest (Word 27KB) charge in the Banking Operations Office consider steps 1 - 34 below.

The guide is presented as follows

Preliminary action Steps 1 - 5
Entry appears on the CIIW Work List Steps 6 - 11
Incorrect EDP used for charging late payment interest Steps 12 - 13
Tax charged reduced to nil Steps 14 - 16
Calculation displayed on Function RMIC screen COT107C is correct Steps 17 - 22
Calculation of interest in struck-off cases Steps 23 - 25
Calculation displayed on Function RMIC screen COT107C is incorrect Steps 26 - 30
Where the AP is overpaid after raising or amending a late payment interest charge Steps 31 - 32
AP is underpaid after raising or amending a late payment interest charge Steps 33 - 34

Preliminary action

1. Before you amend a late payment interest charge, you must have authority to discharge interest on forms AZ44 or IRU1
2. Before you raise a late payment interest charge where there has been a displacement of a relief as a result of a carry back, or S458 (formerly S419(4)) relief has been given , you must have form CT250(P) from the CT Processing Office advising you how to calculate the interest on the carry back
  Note: You must not raise or amend a late payment interest charge clerically unless you have authority to do so
3. Use Function VPPD (View Payment and Postings Details), View AP Summary screen to
 
 
  • Note the total tax charged, as you will need this when using Function RMIC (Raise Manual Interest Charge) later. Take prints of the postings screen. You will need these later
 

And
 
 
Note: You must ensure when using RMIC (Raise Manual Interest Charge), that you correct the overall interest position (late payment and credit / debit interest)
4. Use Function RAPP (Revise AP Pursuit) where necessary to make the AP subject to Clerical Pursuit
5. Check that you have all the information you need to use Function RMIC. As well as the total tax charge, you will need to know the amounts and dates of payment (including any unpaid liability) before calculating the late payment interest

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Entry appears on the CIIW Work List

6. Use CIIW (Clerical Interest Work List) to display the work item
7. Select the [View] button to see all the available details for the case including the reason for entry onto the list
8. Use Function VPPD (View Payment and Postings Details) to display the payment and interest position for the AP
9. Use Function RMIC (Raise Manual Interest Charge) to raise / amend the late payment interest charge
10. See step 17 if the interest accruals are correctly displayed in RMIC
11. See step 27 if the interest accruals are incorrectly displayed in RMIC

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Incorrect EDP used for charging late payment interest

12. If the wrong EDP Word 41KB) has been used to calculate the late payment interest
 
  • Use Function AEDP (Amend Effective Date of Payment) to amend it unless the EDP relates to an ACT, trade loss or a non-trading deficit carry-back
 
  • By amending the EDP COTAX will automatically recalculate the late payment interest to the correct date unless the Clerical Interest Indicator CII (Word 32KB) signal is set. Where this signal is set see step 28 below on how to amend the interest charge
13. Where an incorrect EDP has been allocated to an ACT, trade loss or a non-trading deficit carry-back
 
  • Use Function RAPP (Revise AP Pursuit) to set the Clerical Interest Indicator (CII) to ‘Y’ and, where necessary make the AP subject to Clerical Pursuit
 
  • Use Function RMIC to correct the late payment interest charge. See step 28 below on how to amend the interest charge

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Tax charged reduced to nil

14. Where you wish to reduce a late payment interest charge to Nil, as the tax liability has been reduced to Nil, use Function RMIC to cancel the interest charge by
 
  • Entering a ‘Y’ in the Prepare Interest field on screen COT107C
 
  • Select an accrual and select the [Amend] button
 
  • Enter the Normal Due Date as the Accrual To Date
 
  • Repeat as necessary
15. Select the [OK] button and check that the computation on screen COT107E has been reduced to nil. If the charge has not been reduced to Nil, select the [Prev Panel] button and check that each accrual has an Accrual To Date the same as the Normal Due Date
16. Where the computation is nil enter a ‘Y’ in the Raise / Amend Interest Charge as Calculated field

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Calculation displayed on Function RMIC screen COT107C is correct

17. If the details displayed on screen COT 107C are correct raise a clerical late payment interest charge by entering ‘Y’ in the Raise / Amend Interest Charge as Calculated field
18. If you are not sure that the details are correct enter a ‘Y’ in the Prepare Interest field. Select the [OK] button on screen COT107C. Screen COT107D will then display the following details
 
  • The date interest has been calculated from
 
  • The date interest has been calculated to
 
  • The number of days interest has been charged for
 
  • The rate interest has been charged at
 
  • The amount of interest charged on each accrual
19. If the details on screen COT107D are correct, raise a clerical late payment interest charge by entering a ‘Y’ in the Raise / Amend Interest Charge as Calculated field
20. If the details on screen COT107D are incorrect, you can either
 
  • Abandon the function by selecting the [Exit] button
 

Or
 
  • Select the [Prev Panel] button to return to the previous screen
21. When you have raised a late payment interest charge and the AP becomes overpaid, COTAX will display one of two warning messages
 
  • Where the overpayment is to be automatically reallocated or repaid
 

Or
 
  • Where the overpayment cannot be dealt with automatically the warning will advise you of the Work List that the overpayment is on. Where you see this message see steps 32 - 33 below
22. Where a warning message is not displayed use Function VPPD, View AP Summary screen. Where the AP remains underpaid or overpaid after you create a clerical interest charge see steps 34 - 35 below

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Calculation of interest in struck-off cases

23. Where a time to pay arrangement has been made to pay the outstanding tax by instalments in a struck-off case interest should be calculated using Function CINT (Compute Interest) and included in the arrangement
24. Set the Clerical Interest (CII) signal using Function RAPP (Revise AP Pursuit)
25. Once the tax and the interest has been paid in full
 
  • Contact the CT Processing Office and ask them to remove the struck-off date using function ACTP (Amend CT Payer Details)
 
  • Use function RMIC (Raise Manual Interest Charge) to raise the late payment interest
 
  • Arrange for the CT Processing Office to put the struck-off date back on to the record

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Calculation displayed on Function RMIC screen COT107C is incorrect

26. If the details displayed on screen COT107C are incorrect because late payment interest is being calculated on any unpaid tax liability to today’s date and this is not right, you can amend the interest charge by charging late payment interest to a different date on the unpaid liability
 
  • Enter the correct date in the Date Interest Calculated to field
 
  • Select the [OK] button
  Note: The unpaid liability is denoted by an asterisk ‘*’, in the Unpaid column
27. Where the details on screen COT107C are incorrect and interest has been or will be calculated to an incorrect EDP and COTAX cannot automatically amend it
 
  • Enter ‘Y’ in the Prepare Interest Computation filed
 
  • Select the accrual that needs amending and select the [Amend] button
 
  • Amend the Accrual To Date in the dialogue box to the correct date
 

And
 
  • Select the [OK] button
28. Check the calculation displayed on screen COT107E carefully and, if correct, raise a clerical late payment interest charge by entering ‘Y’ in the Raise or Amend Interest Charge as Calculated field
  If the calculation is incorrect, select the [Prev Panel] button and revise the details you have entered, or exit the function
29. When you have raised a late payment interest charge and the AP becomes overpaid COTAX will display one of two warning messages
 
  • Where the overpayment is to be automatically reallocated or repaid
 

Or
 
  • If the overpayment cannot be dealt with automatically the warning message will advise you of the Work List that the overpayment is on. When you see this message see steps 32 - 33 below
30. Where a warning message is not displayed use Function VPPD View AP Summary screen to check if an underpayment exists on the AP. Where the AP remains underpaid after you create a clerical interest charge see steps 34 - 35 below

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Where the AP is overpaid after raising or amending a late payment interest charge

31. Where the overpayment was created as the result of carry-back or S458 CTA 2010 (formerly S419(4) ICTA 1988) relief
 
  • Telephone the CT Processing Office and ask them to deal with the overpayment
 
  • B/F the entry on LOPU (Overpayment Review List) Work List to ensure the overpayment is cleared
32. In all other cases where Function VPPD (View Payment and Postings Details), View AP Summary screen shows an amount overpaid, use either
 
  • Function REAW (Direct Reallocation Within COTAX) to reallocate the overpayment within COTAX
 

Or
 
  • Function REAO (Direct Reallocation Out Of COTAX) to transfer the overpayment to OAS (Word 28KB) for repayment

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AP is underpaid after raising or amending a late payment interest charge

33. Telephone the Debt Management Office immediately to tell them the correct interest liability where they have
 
  • Created a clerical late payment interest charge following carry-back or S458 CTA 2010 (formerly S419(4) ICTA 1988) relief
 

And
 
  For all other cases
 
  • Issue a full series of payment applications clerically for the tax, penalty and late payment interest that Function VPPD (View Payment and Posting Details) shows as collectible on View AP Summary screen
 

Note: You must ensure clerical payment applications includes all amounts of debit interest and credit interest where appropriate
34. After issuing the full series of clerical payment applications
 
  • Use Function RAPP (Revise AP Pursuit) to amend the Pursuit Status to LA
 
  • Use Function NOTE (Case Notes) to note payment applications issued and reason why case being made local action

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