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

HMRC internal manual

Compliance Operational Guidance

Supporting Guidance: employer compliance: guidance by subject: compliance revenue recording: set-off

An employer/contractor may request that an overpayment be set-off against underpayments arising from the compliance check. For example where

  • there is a CT overpayment
  • there is an overpayment on form P35 and the employer has confirmed all employees have been included in the return.

Where a set-off is to be made you must

  • be certain that the amount is truly available for set-off for example that the amount is repayable to the employer/contractor
  • take action to ensure that repayment of the set-off amount will not be made at a later date by transferring the amount to SAFE pending conclusion of the case and
  • make sure that any records that require updating are amended (SA records, CT records, NIRS2).

Provided the overpayment has not arisen as a result of the enquiries within the case, you should

  • record the full amount before set-off on ECS/Caseflow.

Where the repayment would be due to a third party, usually an employee, but authority has been given for it to be set against the employer’s/contractor’s underpayment you should

  • record the net amount after set-off on ECS/Caseflow (COG915660 - Status).

Note: In ‘tax equalisation’ cases, CPTT will continue to score amounts covered by employer ‘contractual obligations’.

Advice on arranging set-offs where repayment is due to a third party seek advice from TAA Technical.