DMBM405100 - Interest: Interest Review Unit (IRU): General principles: Funds held by another Government Department
Some content of this manual is being considered for archiving. If there is content you use regularly, please email hmrcmanualsteam@hmrc.gov.uk to let us know as soon as possible.
A customer may claim that they did not pay because they were waiting for funds to be paid to them by another Government Department. There are two variations of this.
- A customer may pay money to the 'Indirect Taxes' side of HMRC in error and that part of the Department will not refund the money until the relevant Indirect Tax has been finalised and an overpayment proved.
Where this is the case and the customer pays the Direct Tax promptly after receiving the Indirect Tax refund then award the payment the EDP of the original payment made for the Indirect Tax and give up the difference in interest. Restrict actions to recover repayment supplement or interest where suitable as this will recognise that HMRC had use of the funds instead of the customer.
- A customer may claim that they did not pay because they were waiting for payment of invoices by a Government Department for work they have done.
Where this is the case the interest should be upheld. The Government Department in this case is no different to any other third party owing money to the customer. The customer should not be relying on the payment of recent invoices to fund their tax payment. They should have made funds available for the tax, as it became due during the tax year involved.