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HMRC internal manual

Collection of Student Loans Manual

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HM Revenue & Customs
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Compliance: borrowers compliance: legislation

The primary legislation for income-contingent Student Loans is in the Teaching and Higher Education Act 1998. Secondary legislation, The Education (Student Loans) (Repayment) Regulations 2000, enacted by the Secretary of State for Education and Employment (now the Department for Business Innovation and Skills (BIS)), empowers HMRC to collect Student Loan repayments on the Secretary of State’s behalf and contains the framework for CSL.

The table below gives a brief explanation of the relevant regulations under The Education (Student Loans) (Repayment) Regulations 2009.

Regulation Explanation
   
Reg 8 Service of notices
Any notice required to be given, served or issued may be sent by post.    
  Reg 13(1) Special return penalties
S98 TMA applies for the purposes of repayments under Part 3 or 4 except for the personal return (SA return) required under Reg 30, 33, 60 or 61.    
  Reg 13(2) Assisting incorrect returns
S99 TMA 1970 applies to returns, statements, declarations, accounts, information or documents for the purposes of repayments under Part 3 or 4.    
  Reg 13(3) Penalty proceedings

For 2007-08 and earlier years

S100, 100A, 100B, 100C, 100D, 102, 103(3) and (4), 103A, 104 and 105 TMA 1970 apply to penalties in respect of repayments under Part 3 or 4.

For 2008-09

Where the return is due to be filed on or after 6 April 2009, Schedule 24 FA 2007 (penalties for errors) applies to penalties under Part 3 or 4.    
  Reg 13(6) Rules on documents
S112 to S115A and Sch 3A of TMA 1970 apply to assessments, returns and documents made, required, issued, served, sent or lodged for the purposes of repayments under Part 3 or 4.    
  Reg 13(7) Failure to act within time
S118(2) applies to any required to be done under Part 3 or 4.    
  Reg 13(8) Final and conclusive
Assessment under Part 3 is finally determined when it cannot be varied by Commissioners or Courts.    
  Reg 15(3) Switch on / switch off
  • Secretary of State notifies the borrower and HMRC of the first, or next year of assessment under Part 3
  • Year of assessment repayments cease under Part 3 (where repayment can be deferred by teachers)
  • Final year of assessment under Part 3 because either

    • Loan fully repaid
    • Sufficient Part 4 deductions to repay loan

      Or

    • Loan cancelled    
        Reg 15(6) Latest date of switch off
Secretary of State cannot notify that repayment ceases for a year of assessment after the 31 December following the end of that year.    
  Reg 15(7) Further switch on / off notices
Secretary of State can give further notices where at a later date the loan has not been fully repaid.    
  Reg 19(3) Cancellation of loan
Liability under Part 3 ceases when the borrower dies and where otherwise cancelled the preceding year is the last year.    
  Reg 20(2) Refund of repayment
Where repayment under Part 3 exceeds the loan outstanding, HMRC credits the borrower with the amount overpaid.    
  Reg 28 Repayment same as IT
Repayment under Part 3 made, accounted for and recovered in like manner as income tax payable under the Taxes Acts.    
  Reg 29(1) Borrower must be within SA
Repayment under Part 3 required where notice issued under Reg 15(3) and notice issued for a return under S8 TMA 1970.    
  Reg 29(3) Repayment calculate on
Repayment equal to % of an amount based on the borrower’s total income calculated in accordance with step 1 of section 23 Income Tax Act (ITA) 2007 that is, before personal reliefs and allowances adjusted under Reg 29(4).    
  Reg 29(4) Excluded from total income
  • Annual threshold
  • Any income from a part time eligible employment of an eligible teacher in excess of an annual threshold
  • Unearned income unless it exceeds the limit for year
  • Incapacity benefit
  • Benefits in kind
  • Any reduction or repayment made under Teachers’ Regulations
  • Employment and support allowance
  • Income relieved by losses under S64 or 128 ITA 2007
  • Income relieved of post-cessation expenditure S96 ITA 2007
  • Income relieved under Part 4 Chapter ITA 2007 (pension schemes and so on.)    
      Reg 29(4) Unearned income defined

Unearned income is income other than

  • Income charged under either IT Earnings and Pensions Act 2003 or IT (Trading and Other Income) Act 2005
  • Profits of UK furnished holiday lettings - section 127(2) ITA 2007    
      Reg 30 Repayment to be on SA return
HMRC may require borrower to include in an SA return such information, accounts, statements as reasonably required.    
  Reg 31(1) Repayment self assessed

Every return from a borrower shall include a self-assessment of

  • Repayment required for year

    And

  • Amount payable    
      Reg 32 Keeping records
S12B of TMA 1970 shall apply in the case of a borrower to information under Reg 30 (a).    
  Reg 33 Information powers
  • Sections 13 (persons in receipt of taxable income belonging to others), 15 (return of employees’ earnings etc), 16 (fees, commissions and so on), 16A (agency workers), 20A (powers to call for papers of tax accountant), 20BA (orders for delivery of documents) and 20BB (falsification and so on of documents) applies for the purpose of establishing amount of repayment
  • Schedule 36 FA 2008, applies in relation to checking a borrower’s compliance with Part 3    
      Reg 34 Amending and enquiry powers
S9(2) to (6) and S9A TMA 1970 apply to the self-assessment of the repayment - TMA references extended by regulations.    
  Reg 34 No HMRC determination
  • Parts 4 and 5 of TMA 1970 apply with the exception of

    • A determination under S28C TMA 1970    
        Reg 35(1) Payment of repayment
Repayment paid as if income tax payable under S59B TMA 1970.    
  Reg 35(2) S8 notice issued late due date
Due at least 3 months from day S8 notice issued where S7 notice given within 6 months from end of year of assessment.    
  Reg 35(3) S8 notice issued late due date
Due at least 3 months from day S8 notice issued where S7 notice given within 6 months from end of year of assessment.    
  Reg 35(4) Effect of enquiry /amendment
S59B(4A)(repayment during enquiry), (5)(amendment due date) and (6)(assessment other than S9) TMA 1970 apply.    
  Reg 36 Surcharges
S59C of TMA 1970 applies to repayments as it applies to income tax payable in accordance with S55 or 59B.    
  Reg 37 Collection and recovery
Part VI of TMA 1970 applies to repayments, interest and penalties as it applies to income tax.    
  Reg 38 Representative capacity
S72 (trustees), S74 (personal representatives), S75 (receivers) TMA 1970 apply to repayments.    
  Reg 39 Interest
  • Any repayment due and payable shall carry interest
  • A refund by the Board to the borrower shall carry interest    
      Reg 40(1) Failure to make a return
S93 TMA 1970 applies to returns issued under S8 which are required to include information under Reg 16.    
  Reg 40 (2) Liability for S93(5) penalty
Tax which should have been shown in a return shall be the aggregate of tax under S59B and repayment under Reg 15.    
  Reg 40(3) Incorrect return or accounts

For 2007-08 and earlier years

S95 and 97 TMA 1970 shall apply to anything done for the purposes of repayments as it applies for income tax.

For 2008-09 onwards

Schedule 24 FA 2007 shall apply to anything done and for any returns due to be filed on or after 6 April 2009, statements, declarations etc for the purposes of repayments as it applies for income tax.