COM80030 - Interest: how interest is calculated: clerical calculation of late payment interest
Source: gov.uk (2025-12-08)


COTAX does not automatically calculate and charge late payment interest where the ‘clerical interest’ indicator (CII) is set.

Late payment interest is also not calculated and charged automatically where:
- COTAX is unable to calculate interest correctly on a carry-back see COM50080 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com50080) for more information, or for Section (S458) Corporation Taxes Act (CTA) 2010 (formerly S419(4) Income and Corporation Taxes Act (ICTA) 1988) relief
- there is a ‘date struck off’ on the record and that date has passed
- the number of interest accruals is greater than 200
Interest under Section 87A Taxes Management Act 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 CIIW (Clerical Interest Indicator Work List) in Debt Management Offices and the HMRC Payments in the following circumstances:
- an operator has set the CII to ‘Y’ and the tax is paid but no manual interest charge has been raised
- COTAX sets the CII to ‘Y’ 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)
- the number of interest accruals is greater than 200 and COTAX has set the CII to ‘Y’ automatically
COM81000 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com81000) has more information about these work lists.

Raising a manual interest charge on COTAX

The HMRC Payments and Debt Management Offices use function RMIC (Raise Manual Interest Charge) to raise or amend a late payment interest charge on COTAX. It is calculated on any tax paid late from the normal due date (see Glossary) for the Accounting Period (AP) to the:
- effective date of payment (EDP) if the company is still live or in voluntary liquidation
- date of liquidation for all other types of insolvency
You can only use this function for charges where the number of interest accruals is 200 or less. Where the number exceeds this, the charge needs to be raised on the SAFE system.

Before you amend an interest charge, you must get authority on the appropriate form:
- AZ44, 987, IRU1 in the HMRC Payments
- AZ63 in Debt Management Offices
The form will tell you why the original calculation was wrong.

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 as follows.

In HMRC Payments where the CII is set to 'Y' and the Pursuit Status is:
- RFI or PRFI
- LA, LA-ENF or PLA 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. HMRC Payments handle the clerical interest calculation in those cases.

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 as details of the computation do not update the company record.

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Raising a manual interest charge on SAFE

Where the number of interest accruals is greater than 200, COTAX is unable to calculate and raise the charge either automatically or manually. When this happens, COTAX automatically sets the CII to ‘Y’ and puts the case on CIIW (Clerical Interest Indicator Work List). You need to calculate the interest charge clerically and arrange for it to be raised on the SAFE system.

See COM81000 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com81000) for more information about this work list.

If you receive an objection to the interest charge, see COM82000 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com82000).

See:
- COM80011 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80011) for a list of forms relevant to this subject
- COM80012 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80012) for a list of functions to use in particular situations
- COM80013 (https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com80013) for legislation applying to this subject