Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Collection of Student Loans Manual

From
HM Revenue & Customs
Updated
, see all updates

Compliance: borrowers compliance: settlement procedures

If discovery assessments are made for earlier years an additional entry must be made in SA to report the additional repayments to the Student Loans Company using SA Function CREATE RETURN CHARGE. This must only be done when the assessments become final on expiry of the appeal period or following determination of an appeal.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

For contract settlements, the procedure varies depending on whether the loan is repaid or not. There are 3 different types of case

  • The Student Loan will not be repaid by the additional repayments
  • The Student Loan has already been repaid
  • The additional repayments will result in the loan being repaid

Where you need to establish whether the loan has been repaid or not you should refer the case to TAA Direct Tax Technical queries (CenPOL TaxAdminAdvice). They will contact the East Kilbride Student Loans Unit (EKSLU) who will ask the Student Loans Company to recalculate the loan.

The remainder of this subject is presented as follows

Contract Settlement Type 1

You should calculate and include the Student Loan repayments in the settlement in the same way as unpaid income tax. The repayments should be

  • Referred to separately in the offer letter

And

  • Set out in a separate statement of unpaid Student Loan repayments

You also need to amend the wording after ‘my obligation’ to ‘under the relevant Acts and Regulations’.

Contract Settlement Type 2

As the loan has already been repaid there is no point in recovering the Student Loan repayments which are legally payable. Those repayments should not be included in a contract settlement.

However, you should pursue interest and penalties on the additional repayments (This content has been withheld because of exemptions in the Freedom of Information Act 2000) - see CSLM8560, CSLM8565 and CSLM8570.

The unpaid repayments are not shown in the offer but the following words should be added to the letter of offer after ‘interest on them’

‘and also in consideration of no proceedings being taken against me for interest and penalties on Student Loan repayments arising under the relevant Acts and Regulations’.

Contract Settlement Type 3

When the Student Loans Company recalculates the loan interest to take account of the additional repayments included in the contract settlement, a small repayment of the loan is likely to arise. You should not attempt to calculate this amount. Instead, the ‘inhibit repayment signal’ should be set until the settlement has been paid. This will enable you to ensure that the resulting over repayment of the loan is allocated against any part of the settlement charge that remains unpaid.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Self-assessment of Student Loan repayments cannot be switched off for a year of assessment after 31 December following the year of assessment. See CSLM8555. As repayments will not be switched off until 1 to 2 months after an enquiry is finally settled you may need to advise the taxpayer to include a self-assessment of Student Loan repayments in any outstanding returns to be filed even though the loan will be or is now repaid. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Post settlement action

The additional Student Loan repayment liability recovered by a contract settlement or by discovery assessments must be entered on SA using SA Function CREATE RETURN CHARGE or CREATE RETURN CHARGE FOR ENQUIRY to ensure that it is reported to the Student Loans Company.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Where, as a consequence of the additional repayments the loan is repaid, the Student Loans Company refunds HMRC who credits the taxpayer. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)