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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Repayments / reallocations: overpayments: general: CT251 Helpcard

General information
Important points to note
Reallocations
Effective date of payment (EDP)
Permanent overpayment case - reason for POP must be provided
Bona vacantia
Large repayments
Repayments
Repayment / reallocation interest
Reallocation of repayment / reallocation interest
Finally

General information

You should use form CT251 to advise Cumbernauld where you have moved an overpayment from COTAX to OAS using function REOD (Reallocation out of COTAX) and it needs to be reallocated or repaid. This is when:

  • an amount is a permanent overpayment (POP)
  • the company has been struck off, so all overpayments are subject to Bona Vacantia
  • a COTAX overpayment cannot be repaid or reallocated from COTAX, such as when the record is locked during an enquiry
  • an amount is to be reallocated to another duty type for the company, such as PAYE or VAT
  • an amount is to be reallocated to CT of the company held on another system, such as SAFE
  • an amount is to be reallocated to another company in circumstances where S963 CTA 2010 (formerly S102)/Reg9 does not apply.

Important points to note

You should email the completed form to Cumbernauld by selecting the button with an envelope and a paper clip, attach any additional documents you need to send to Cumbernauld and email the form to:

  • CT Unit, CT Ops Enquiry (DMB Banking) if you work outside LBS
  • CT Unit, LBS Enquiry (DMB Banking) if you work in the LBS

You must not send it as an e-form as Cumbernauld cannot deal with them.

Where the amount exceeds £10,000 you should always enter ‘Large CT251’ in the subject field.

Where a repayment is to be made and it is £250,000 or more, you must always attach a copy of the R49 with the CT251.

Where repayment is to be reallocated to a Group Payment Arrangement (GPA) you should mark the CT251 clearly that it is for a GPA case. Remember that you should only reallocate payment to a group payment record and not to any of the live participators. If you are in any doubt, you should contact the Group Payment Team on 03000 583 947 for advice.

You must not move a payment into OAS or use this form where a payment has been misallocated to an incorrect record or accounting period. You should send a memo (This content has been withheld because of exemptions in the Freedom of Information Act 2000) , explaining where the payment is held and where it should be reallocated to. Cumbernauld will make the reallocation for you and make sure that the original EDP is given.

You must not use this form where you need to make a reallocation to another company under S963 CTA 2010 (formerly Section 102), Regulation 9 or a reallocation to another COTAX AP of the same company. You should use function REWD and select the correct reallocation option. If COTAX will not let you make the reallocation, contact the COTAX Helpdesk (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

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Reallocations

You must always provide a full and correct reference of where the payment is to be reallocated to. If you only advise that the payment is to go to SAFE, VAT, PAYE, Insolvency, Enforcement Office and so on, Cumbernauld will not be able to make the reallocation.

References must be in the proper format and provide the account period end or year. See the examples below.

COTAX

1 2 3   1 2 3 4 5 6 7 8 9  
                           

APE

01 01 2007
     

AP number

1 4
   

PAYE - please indicate month number if known

1 2 3 P   1 2 3 4 5     9   1
                             

RTI

1 2 3 P V 1 2 3 4 5 6 7 8
                         

SA

1 2 3 4 5 6 7 8 9  
                   

SAFE - including payments on account

X           1 2 3 4 5 6 7 8
                           

VAT

1 2 3   4 5 6 7   8 9
                     

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Effective date of payment (EDP)

It is very important that interest is calculated correctly so that:

  • customers receive full credit for sums to which they are legally entitled
  • the exchequer suffers no loss from giving a credit that is not due.

Because in the majority of cases the EDP is the date of reallocation, Cumbernauld always uses an EDP of the date of reallocation when calculating repayment interest (RPI) except where the following apply.

  • The date of reallocation is not the correct EDP. In these cases you must provide the correct date on the form CT251 and always send a covering memo explaining the reason why.
  • The reallocation is to be made to a SAFE charge. In these cases you are responsible for advising Cumbernauld of the EDP and for calculating the RPI. You should use function RINT (Repayment Interest Calculation) to do this. You must send a covering memo or RINT calculation with the CT251 showing the EDP and the RINT calculation.

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Permanent overpayment case - reason for POP must be provided

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

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

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Bona vacantia

Where a company has been struck off and dissolved at Companies House, all overpayments are deemed bona vacantia (BV) and must be reallocated out of HMRC and treated as a repayment to the BV recipient. You must use function REOD (Direct Reallocation Out Of COTAX) Class 1, Hold for reallocation and tick the BV recipient box which is appropriate to the registered office of the company on the CT251 in the section headed Bona Vacantia.

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Large repayments

Where the repayment is £250,000 or more you must make sure an R49 check is carried out in the originating office and the R49 box on the CT251 completed. See COM124040 for further details on the process to be followed.

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Repayments

You should only reallocate a payment into OAS to make a repayment where the accounting period is still under enquiry or where COTAX will not allow you to use function DIRR (Direct Repayment), or where bona vacantia applies.

Where the repayment is for £150,000 or more, the repayment will be made by CHAPS. You should contact the company and ask them to provide on company headed paper:

  • agreement to the repayment being made by CHAPS
  • bank account number
  • sort code
  • account name and address of the bank to which the repayment will be made.

You should send these details to Cumbernauld with the C251 and they will then make the repayment for you.

Where the repayment is £250,000 or more, you must make sure that an R49 check is carried out in the originating office and the CT251 completed accordingly. See COM124040 for further guidance on the process to be followed.

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Repayment / reallocation interest

Repayment interest

Where an amount to be repaid, Cumbernauld calculates any repayment due.

Reallocation interest

Interest should always be given on reallocations except in the following circumstances.

  • The overpayment is to be reallocated to a SAFE charge and is part of a contract settlement.
  • The amount is to be reallocated was originally and payment or credit of:

    • credit interest
    • penalty
    • late payment interest
    • debit interest.
  • The interest rate is 0 per cent.

If there is any other reason why interest should not be given, you must attach a memo to the CT251 explaining why.

Cumbernauld uses function RINT (Repayment Interest Calculation) to calculate the amount of interest due. Interest is due from the day after the material date. The material date is the later of the following.

  • The EDP of the payment.
  • The EDP of the loss or ACT carry back or S458 relief.
  • The due date of the AP from which the payment is being reallocated.

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Reallocation of repayment / reallocation interest

You should always advise Cumbernauld if the interest due to the company is to be:

  • allocated back to where the original payment came from
  • allocated to the same place the reallocation is being made to
  • repaid to the company.

If you do not tell Cumbernauld where the interest is to go, it will cause a delay in your CT251 being dealt with and they will have to contact you for this information.

You should note that you should never enter ‘No’ in both fields of the interest section of the CT251.

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Finally

Please remember to include your name and provide a telephone number on the CT251 and attach a printout of the RINT calculation if appropriate. Cumbernauld can then contact you if anything on the form is unclear.