COM80085 - Interest: how interest is calculated: credit / debit interest: clerical charge (banking operations) (Action Guide)

Preliminary action

Steps 1 - 5

Entry appears on the CDIW Work List

Steps 6 - 11

Incorrect EDP used for charging credit / debit interest

Step 12

Claim for calculation of credit / debit interest before NDD - QP Case

Steps 13 - 16

Claim for calculation of credit interest before NDD - non QP case

Steps 17 - 21

Clerical calculation of credit / debit interest following reallocation out of COTAX

Steps 22 - 25

Supplementary tax on North Sea Oil companies

Steps 26 - 27

Calculation displayed on Function RMIC screen COT107G Dialogue Box showing Credit / Debit Interest Accrual details is correct

Steps 28 - 31

Calculation displayed on Function RMIC screen COT107G Dialogue Box showing Credit / Debit Interest Accrual details is incorrect

Steps 32 - 36

AP is overpaid after raising or amending a clerical credit / debit interest charge

Step 37

AP is underpaid after raising or amending a clerical credit / debit interest charge

Steps 38 - 39

1.

Before you raise or amend a credit / debit interest charge you must 

• Have authority to reduce overcharged interest on forms AZ44 or IRU1

2.

Use Function VPPD (View Payment and Posting Details), View AP Summary screen to confirm the

• Company’s self assessment is recorded or a Revenue Determination (Word 29KB) has been made

• Normal CT due date (Word 49KB) for the AP has passed. Unless you are dealing with a claim for early calculation of credit interest (Word 30KB) before the normal due date, see steps 13 to 21

• AP is subject to Clerical Pursuit (Word 28KB) 

• Take screen prints of the postings screens. You will need these later - see step 28

3.

Where the AP is not subject to Clerical Pursuit use Function RAPP (Revise AP Pursuit) to set the RFI (word 31KB) signal

4.

Use function DAPD (Display AP Details) to check if the Quarterly Instalment Payment (Word 42KB) (QIP) signal is set to ‘Y’

5.

Where the QIP signal is set to ‘Y’ then use Function DINT (Display Interest Computation) to confirm

• The quarterly instalment amounts

• The quarterly instalment due dates (Word 42KB) 

6.

Use Function CDIW (Credit Interest Work List) to display the work item

7.

Select the [View] button to see all 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 postings for the AP

9.

Use Function RMIC (Raise Manual Interest Charge) to raise / amend the credit and / or debit interest charge

10.

See step 28 if the interest accrual details are correctly displayed in RMIC

11.

See step 32 if the interest accrual details are incorrectly displayed in RMIC

12.

If the wrong EDP (Word 41KB) has been used to calculate credit / debit interest

• Use Function AEDP (Amend Effective Date of Payment) to amend it

• By amending the EDP COTAX will automatically recalculate the credit / debit interest to the correct date unless the Credit / Debit Interest Indicator (CDII) (Word 29KB) signal is set. Where this signal is set see steps 32 to 33 below on how to amend the interest charge.

13.

Where there is still an amount of tax outstanding, you should advise the company that this must be paid before you can calculate any credit / debit interest due

14.

Where an overpayment still exists on the AP contact the CT Processing Office and ask them, where possible, that this be dealt with first so that you can include the excess payments in your interest calculations

15.

Use Function VPPD (View Payment and Posting Details), View AP Summary screen to confirm

• A self assessment or amendment has been made

• AP is subject to clerical pursuit

• The tax charge has been settled in full

• Take screen prints of the postings screen

16.

Use Function RMIC (Raise Manual Interest Charge) to calculate and raise credit interest

17.

Where there is still an amount of tax outstanding, you should advise the company that this must be paid before you can calculate any credit interest due

18.

Where a nil tax charge has been recorded you should ensure that all the tax has been either repaid or reallocated before making your calculation

19.

Where a positive tax charge has been posted you will need to advise the company that you cannot calculate the full amount of credit interest due until the NDD has been reached. This is because the NDD is in the future and there may be a possibility of interest rate changes

20.

Use Function VPPD (View Payment and Posting Details), View AP Summary screen to confirm

• A self assessment or amendment has been made

• AP is subject to clerical pursuit

• The tax charge has been settled in full

• Take screen prints of the postings screen

21.

Use Function RMIC (Raise Manual Interest Charge) to calculate and raise credit interest

22.

If the money was allocated in error to the AP then you should calculate credit / debit interest but do not include that payment in your calculation

23.

If the money was correctly allocated to the AP and has subsequently been repaid through OAS (Word 28KB) then you should

• Calculate credit / debit interest and include that payment in your calculation up to the date of repayment or the normal due date which ever is the earliest

24.

If the money was correctly allocated to the AP and has subsequently been reallocated to another COTAX record, then apply common period (Word 29KB) rules and calculate credit / debit interest according to the rules. Flow charts on how to apply the rules are available on the COTAX intranet site under ‘Where to get help'

25.

If the money was correctly allocated to the AP and has subsequently been reallocated to another head of tax, for example PAYE, then common period rules do not apply and you should calculate credit / debit interest up to the date of reallocation or the normal due date whichever is the earliest

26.

Where Function RMIC displays a message indicating that the AP straddles the transitional period for the introduction of the supplementary tax on North Sea Oil on companies, select the [S501A] button to view the additional instalment details

27.

Once you have viewed the additional instalment details you will need to return to the previous screen by selecting the [OK] button to perform / correct the interest calculation. See step 28 where the interest accruals are correct and step 32 where the interest accruals are not correct

28.

If the details displayed on screen COT107G Dialogue Box (accessed by selecting the [Accruals Details] button) are correct, raise a clerical credit / debit interest charge by entering ‘Y’ in the Raise / Amend Interest Charge as Calculated field

29.

If you are not sure that the details are correct then exit the function and check the calculation using Function DINT (Display Interest Computation)

30.

When you have raised a credit / debit 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

• If the overpayment cannot be dealt with automatically the warning message will advise you of the Work List that the overpayment is on. Where you see this message see step 37 below

31.

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 credit / debit interest charge see steps 38 - 39 below

32.

If the details displayed on screen COT107G Dialogue Box are incorrect

• Select the [Cancel] button to return to screen COT107G

• Select the [Print] button to obtain a screen print

• Select the [Accrual Details] button to display the Dialogue Box again

• Review the details (Word 75KB)

33.

Revise the details from the Dialogue Box screen by

• Selecting an entry

• Selecting the [Amend Accruals] button

• Selecting the [Amend] or [Delete] button as appropriate

• Entering the correct Computation Amount and Accrual To Date on the second Dialogue Box, Manual Interest Calculation Details

• Selecting the [Amend Accruals] button

• Selecting the [Add] button

• Entering the correct Computation Amount and Accrual To Date on the second Dialogue Box, Manual Interest Calculation Details

• • The instalment due dates

• • The instalment amounts

• • Credit / debit interest due

34.

Check the revised calculation displayed on screen COT107G Dialogue Box carefully and, if correct, raise a credit / debit interest charge by entering ‘Y’ in the Raise or Amend Interest Charge as Calculated field

If the calculation is still incorrect, repeat steps 32 and 33, or abandon the function

35.

When you have raised a credit / debit 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

• If the overpayment cannot be dealt with automatically the warning message will advise you of the Work List that the overpayment is on. Where you see this message see step 37 below

36.

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 credit / debit interest charge see steps 38 to 39 below

37.

Where Function VPPD (View Payment and Posting Details), View AP Summary screen shows an amount overpaid, use either

• Function REAW (Direct Reallocation Within COTAX) to reallocate the overpayment within COTAX

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

38.

Where Function VPPD (View Payment and Posting Details), View AP Summary screen shows an amount underpaid

• 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

• Include the net debit interest in the amount of late payment interest due (if any) and treat the net credit interest as a payment

39.

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