Contract-settlement interest objections go to Interest Review Unit

Interest in a contract settlement is upheld unless there is clear evidence of HMRC error or unreasonable delay in handling the settlementGOV, judged under DMBM405010, with events before the contractual settlement due date disregarded. The due date is set by the officer when the settlement is agreed: 30 days after HMRC's acceptance letter, another HMRC-given date, a mutually agreed date, or instalment dates, with the offer and acceptance forming a binding contract to pay on time.

Where an enquiry is still ongoing — HMRC has neither reached a contractual settlement nor proceeded formally — the customer is told interest is a statutory charge with no right of appeal against the interest itselfGOV, and that Payments on Account prevent further interest accruingGOV. A dispute over the technical application of the interest legislation or the underlying statutory framework goes to the TALA Interest Team for adviceGOV.

Where HMRC has entered into a contractual settlement agreement or proceeded formally, review responsibility sits with the Interest Review UnitGOV, which took it over on 1 July 2026GOV. The caseworker follows the local interest objection referral process and puts "Contract Settlement" in the referral title. The Unit supplies the form of words for the caseworker to issue to the customer. If the Unit upholds the objection, the referring caseworker processes the remission or ex gratia payment according to the customer's chosen remedyGOV. The previous route of the local office passing the matter to CP-TAP no longer appliesGOV.

Acceptance letters set out the agreed basis, payment methods, exact dates, the customer's responsibility to pay on time without waiting for a payslip, and how to pay without one. A missing or late payslip does not displace interestGOV. Relief is considered only for HMRC-side failures such as an acceptance letter not sent, sent late or not receivedGOV, with interest set aside for the identified period of unreasonable delay. Instalment settlements carry 14 interest-free days after each instalment due dateGOV, with interest from the 15th day; on default the arrangement is cancelled, the whole balance falls due, and forward interest in the settlement is recalculated and offset.

Legal basis is the statutory interest charge on late-paid tax under sections 86, 87 and 87A of the Taxes Management Act 1970.