COM80036 - Interest: how interest is calculated: late payment interest: clerical charge (debt management) (Action Guide)

Preliminary action

Steps 1 - 3

Incorrect EDP used for charging late payment interest

Steps 4 - 5

Tax charge reduced to nil

Steps 6 - 8

Calculation of interest in struck-off cases

Steps 9 - 12

Calculation displayed on Function RMIC screen COT107C is correct

Steps 13 - 18

Calculation displayed on Function RMIC screen COT107C is incorrect

Steps 19 - 23

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

Step 24

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

Step 25

1.

Before you raise or amend a late payment interest charge, you must have

• Received authority to discharge interest on form AZ63

• Responsibility for lodging the Revenue’s claim in an Insolvency

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

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

• • 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 this later

• • • • And

• • Check the debit interest (Word 31KB) and credit interest (Word 34KB) position for the AP

Note: You must ensure when using RMIC (Raise Manual Interest Charge), that you correct the overall interest position (late payment and credit / debit interest)

2.

Use Function RAPP (Revise AP Pursuit) where necessary to make the AP LA (Word 28KB) 

3.

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

4.

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 the signal is set see step 21 below on how to amend the interest charge.

5.

Where an incorrect EDP has been allocated to an ACT, trade loss or a non-trading deficit carry-back

• Refer the correspondence to the Banking Operations Office

6.

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

7.

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

8.

Where the computation is nil enter a ‘ Y’ in the Raise / Amend Interest Charge as Calculated field

9.

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

10.

Set the Clerical Interest (CII) signal using Function RAPP (Revise AP Pursuit)

11.

Use Function LRFI (Refer For Instructions List) to monitor the time to pay arrangement

12.

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

13.

If the details displayed on screen COT107C are correct raise a clerical late payment interest charge by entering ‘Y’ in the Raise / Amend Interest Charge as Calculated field

14.

If you are not sure that the details are correct enter a ‘Y’ in the Prepare Interest field. Select the [OK] button on screen COT107D. Screen COT107E will 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 interest rate interest has been charged at

• The amount of interest charged on each accrual

15.

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

16.

If the details on screen COT107D are incorrect you can either

• Abandon the function by selecting the [Exit] button

• Select the [Prev Panel] button to return to the previous screen

17.

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

• If the overpayment cannot be dealt with automatically the warning message will advise you of the worklist that the overpayment is on. Where you see this message see step 24 below

18.

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 step 25 below.

19.

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

20.

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 field

• Select the accrual that needs amending and select the [Amend] button

• Amend the Accrual To Date in the dialogue box to the correct date

• Select the [OK] button

21.

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

22.

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

• 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 24 below

23.

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 step 25 below

24.

If 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 (Word 28KB) for repayment

• Send a memo to Banking Operations providing details of how the repayment is to be disposed of

25.

Where you have raised or amended a clerical late payment interest charge, or where the Banking Operations Office tell you the late payment interest charge is correct

• Resume normal pursuit action for the collectible amounts shown on Function VPPD (View Payment and Posting Details), View AP Summary screen at the earliest opportunity