DMBM210110 | Payment allocation, overpayments and repayments: payment allocation: order in which debts should be satisfied

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In cases where you have the right to allocate the payment, you should do so in the order shown in the list below and within each category, against outstanding debts, oldest first. It should be rare for a customer to have more than one or two debts in this list.

• 1. European Union (EU) duties and levies - Customs duties and agricultural duties / levies imported from non-EU countries. These debts are all worked centrally by the EEC Team in Liverpool. They are not tax debts referred to under the MARD arrangements which are treated like the equivalent UK tax debts.

• 2. Debts already subject to enforcement action; these include:

  • Distraint already levied

  • Summary Proceedings (SP) order made

  • County Court Judgment (CCJ) entered

  • Statutory demand or Bankruptcy petition pending

  • Winding up petition served in England, Wales and Northern Ireland

  • Ordinary Cause or Summary Warrant in Scotland

  • Clear enforceable fees and costs before duty

• 3. Class 2 NICs

• 4. Interest-bearing debts

• 5. Non interest-bearing debts (excluding Class 2 NICs) which includes enforcement fees and costs that have not yet been awarded.

You should:

• tell the customer how their payment has been allocated

• not allocate on a pro-rata basis unless this is what you have agreed to do earlier.