COM80086 - Interest: how interest is calculated: credit or debit interest: clerical charge (debt management) (Action Guide)
Source: gov.uk (2025-11-14)


This page is currently under review

To raise or amend a credit interest and debit interest charge in the Debt Management Office consider steps 1 - 20 below.

The guide is presented as follows.

Steps 1 – 5 Preliminary action (#IDAO4XCG)

Step 6 Incorrect EDP used for charging debit or credit interest (#IDAJEYCG)

Steps 7 – 8 Supplementary tax on North Sea Oil companies (#IDAOFYCG)

Step 9 – 12 Calculation displayed on function RMIC screen COT107G dialogue box showing credit or debit interest accrual details is correct (#IDAUGYCG)

Steps 13 – 17 Calculation displayed on function RMIC screen COT107G dialogue box showing credit or debit interest accrual details is incorrect (#IDA5JYCG)

Step 18 AP is overpaid after raising or amending a clerical credit or debit interest charge (#IDA2WYCG)

Steps 19 - 20 AP is underpaid after raising or amending a clerical credit or debit interest charge (#IDAGZYCG)

Preliminary action

1. Before you raise or amend a credit or debit interest charge you must have authority to reduce overpaid interest on form AZ63.

You must not raise a credit or debit interest charge clerically unless you have the appropriate authority.

2. Use function VPPD (View Payment and Posting Details), view Accounting Period (AP) summary screen to confirm the following:
- the company’s self assessment is recorded or a revenue determination has been made
- the AP is subject to clerical pursuit
Take screen prints of the postings screens. You will need these later at step 7.

3. Where the AP is not subject to clerical pursuit use function RAPP (Revise AP Pursuit) to make the AP LA.

4. Use function DAPD (Display AP Details) to check if the ‘quarterly instalment payment’ (QIP) signal is set to ‘L’ or 'V'.

5. Where the ‘QIP’ signal is set to ‘L’ or 'V', use function DINT (Display Interest Computation) to confirm:
- the quarterly instalment amounts
- the quarterly instalment due dates
Incorrect EDP used for charging debit or credit interest

6. If the wrong EDP (Effective Date of Payment) has been used to calculate credit or debit interest, use function AEDP (Amend Effective Date of Payment) to amend it.

By amending the EDP, COTAX automatically recalculates the credit or debit interest to the correct date unless the ‘credit/debit interest’ indicator (CDII) is set. Where this signal is set see step 13 on how to amend the interest charge.

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Supplementary tax on North Sea Oil companies

7. Where function RMIC (Raise Manual Interest Charge) displays a message indicating that the Accounting Period (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.

8. Once you have viewed the additional instalment details, you need to return to the previous screen by selecting the [OK] button to perform or correct the interest calculation. See step 9 where the interest accruals are correct and step 13 where the interest accruals are not correct.

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Calculation displayed on function RMIC (Raise Manual Interest Charge) screen COT107G dialogue box showing credit or debit interest accrual details is correct

9. If the details displayed on screen COT107G dialogue box (accessed by selecting the [Accruals Details] button) are correct, raise a clerical credit or debit interest charge by entering ‘Y’ in the ‘raise or amend interest charge as calculated’ field.

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

11. When you have raised a credit or debit interest charge and the Accounting Period (AP) becomes overpaid, COTAX displays one of two messages telling you what will happen next:
- where the overpayment is to be automatically reallocated or repaid
- if the overpayment cannot be dealt with automatically, it advises you which worklist the overpayment is on. When you see this message, see step 18
12. Where a warning message is not displayed, use function VPPD (View Payment and Posting Details), view AP summary screen to check if an underpayment exists on the AP. Where the AP remains underpaid after you create a clerical credit or debit interest charge, see steps 19 - 20.

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Calculation displayed on function RMIC (Raise Manual Interest Charge) screen COT107G dialogue box showing credit or debit interest accrual details is incorrect

13. If the details displayed on screen COT107G dialogue box are incorrect:
- select the [Cancel] button to return to screen COT107G below
- select the [Print] button to obtain a screen print
- select the [Accrual Details] button to display the Dialogue Box again
- review the details
14. Revise the details from the dialogue box screen by:
- selecting an entry
- selecting the [Amend Accruals] button
- selecting the [Amend] or [Delete] buttons as appropriate
- entering the correct computation amount and accrual to date on the second dialogue box, manual interest calculation details
A new entry may be made by:
- 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
Alternatively you can use RMIC to do a full recalculation by selecting the [Payments] button. This allows you to enter details about the Accounting Period (AP) and the payments made. From these details COTAX calculates:
- the instalment due dates
- the instalment amounts
- credit or debit interest due
15. Check the revised calculation displayed on screen COT107G dialogue box carefully and, if correct, raise a credit or debit interest charge by entering ‘Y’ in the ‘raise or amend interest charge as calculated’ field.

If the calculation is still incorrect, repeat steps 13 and 14 or exit the function.

16. When you have raised a credit or debit interest charge and the AP becomes overpaid, COTAX displays one of two messages telling you what will happen next:
- where the overpayment is to be automatically reallocated or repaid
- if the overpayment cannot be dealt with automatically, it advises you which worklist the overpayment is on. When you see this message see step 18
17. Where a warning message is not displayed, use function VPPD (View Payment and Posting Details), view AP summary screen to check if an underpayment exists on the AP. Where the AP remains underpaid after you create a clerical credit or debit interest charge, see steps 19 - 20.

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

18. Where function VPPD (View Payment and Posting Details), view Accounting Period (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 for repayment
Send a memo to HMRC Payments giving details of how they should dispose of the repayment.

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

19. Where function VPPD (View Payment and Posting Details), view Accounting Period (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 shows as collectible on view AP summary screen
- include the net debit interest in the amount of any late payment interest due and treat the net credit interest as a payment
20. After issuing the full series of clerical payment applications, proceed with appropriate recovery or enforcement action.

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