HMRC - Always check interest charges

Chief1975

For those of you who have made arrangements to pay outstanding tax over several months, make sure you check the amount of interest you are being charged by Debt Management. I didn't get my self assessment in this year before the 31st December so what tax I owed couldn't be calculated into my regular employment meaning HMRC wanted all what I owed (£1200 approx) by 31st Jan.

I wanted to see if I could pay in installments so was put through to Debt Management where it was agreed I would pay half in Jan & the rest in Feb plus interest. When they sent me the paper work through they had added a third payment for March......... £250 interest accrued!
I thought that can't be right, 22% interest over two months!, so I called them and sure enough it was a mistake, they guy on the phone couldn't work out how it had happened, interest should be more like £1.80!

Thing is it was only because it stood out to me as being wrong that I question it :eek:

Mikeyorks

Chief1975 wrote: »

£250 interest accrued!
I thought that can't be right, 22% interest over two months!, so I called them and sure enough it was a mistake, they guy on the phone couldn't work out how it had happened, interest should be more like £1.80!

It's essentially a manual calculation in order to add the anticipated interest to the instalment arrangement. It won't be fully accurate unless you pay on the precise dates they specify in the arrangement (not normally DD required for < 3 instalments). But it will normally be more accurate than in your case!

But once you had paid - the SA system would have calculated the interest, correctly, and credited you with a close to £250 overpayment.