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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Appeals: handling appeals and postponements: postponement creating overpayment (Action Guide)

When you use function HAPP (Handle Appeal) to record a postponement that would cause an overpayment and you see the following message ‘This will create an overpayment that will be listed on the overpayments work list LOPD - inform the inspector’, consider steps 1 - 8 below.

1.  Refer the postponement back to the decision maker to confirm they agree to the overpayment or negotiate with the company or agent for a lesser postponement. See COM10050 for more information.

2.  In the meantime:

  • delete the entries you have made
  • informally stand over any unpaid tax
  • B/F the case on the LASO (Open Appeals and Informal Standovers) work list to ensure that the postponement is actively managed. See COM10120 for further guidance.

3.  If the decision maker agrees to the overpayment, use function HAPP (Handle Appeal) to:

  • reduce the informal standover that you set at step 2 to nil
  • record the amount included in the formal postponement request which will make the AP overpaid.

Use function VPPD (View Payment and Posting Details) to check if there are any other outstanding COTAX arrears. Where there are, go to step 4.

Check if there are any other arrears outside COTAX, including contacting the Debt Management office regarding any outstanding law costs. Where there are, go to step 5.

If there are no arrears within or outside COTAX, go to step 6.

4.  If there are outstanding COTAX arrears, pass the file or papers to the caseworker dealing with the case to reallocate the overpayment using function REWD (Direct Reallocation Within COTAX).

5.  If there are other arrears outside COTAX, pass the file or papers to the caseworker dealing with the case to:

  • reallocate the overpayment to OAS using function REOD (Direct Reallocation Out Of COTAX)
  • send form CT251 to the CT Unit Cumbernauld to tell them how to allocate the amount.

COM120100 has guidance on completing form CT251.

6.  If there are no arrears within or outside COTAX, pass the file or papers to the caseworker dealing with the case to repay the overpayment using function DIRR (Direct Repayment).

7.  If the decision maker does not agree to the overpayment take the following actions.

  • Use function HAPP to reduce the informal standover that you set at step 2 to nil.
  • Enter the decision maker’s counter proposal in the ‘postponed amount’ field. COTAX uses that figure when it issues the postponement alternative proposal form 64-5(1).
  • Set the postponement status to ‘disputed’. COTAX formally postpones any unpaid tax for the AP when it issues form 64-5(1).
  • B/F the case for return of the agreement to alternative proposal form 64-5(2).

8.  When you receive the company’s response to the counter proposal, follow the guidance at COM10054 steps 6 to 8 as appropriate.