Repayments / reallocations: non automatic repayments: direct repayment - responsible office
Use function DIRR (Direct Repayment) to deal with the following.
- A repayment that COTAX will not handle automatically and has listed on the LOPD (Overpayments List) or the ORUR (Overpayments Requiring Urgent Review List) work lists.
- A repayment, if the reason is not payment clearing, that COTAX will not handle automatically for 14 working days and places on the ORUR (Overpayments Requiring Urgent Review List).
- Any other repayment you wish to make directly out of COTAX where you do not require COTAX to automatically make the repayment. See COM120000 onwards.
You can make repayments for up to ten APs for the same company in a single use of DIRR. The COTAX record is updated to take account of the repayments when you confirm on screen COT171I that you have completed all the repayments you wish to make for the company.
COTAX then issues a single Bacs transfer or payable order covering all these APs, providing you did not indicate that the repayment is to be issued manually.
All UK bank accounts should have no more than eight digits in their account numbers. Where you find an account number longer than this you should check with the company that it is correct and if it is, confirm that it relates to a UK account. Where they confirm it is correct and is for a UK bank, the repayment needs to be made by payable order as the Bacs system cannot deal with it.
You should only enter a ‘Y’ in the manual repayment option if the overpayment is £150,000 or more, you have been unable to obtain bank details and you are using the PORF procedure to make the repayment. You should not use it for any other type of repayment. See COM125020 for further guidance.
Repayment to an overseas bank account
COTAX does not have the facility to make a Bacs repayment to foreign banks. Where you find that a repayment needs to be made to an overseas bank account, the repayment should be made by payable order unless the repayment exceeds £100,000, is due to departmental error or will cause embarrassment.
In these circumstances you can make the repayment by CHAPS.
The repayment is normally made in sterling, but before making the repayment you must confirm that the overseas account can receive CHAPS payments in sterling. Where it cannot, you need to advise the company that the repayment will be made in the currency of the account, but this may not give them the most favourable exchange rate.
Using CHAPS to make a repayment is expensive, is not the preferred method of repayment, and should only be used in exceptional circumstances.
Repayment of specific amounts
You can use DIRR to repay the total or a lesser amount of the aggregate CT, interest and penalties paid by a company for an AP, until a tax charge is created by the recording of a self assessment or a revenue determination.
It is unusual to repay all of any apparent overpayment before the liability for an AP is settled. You may, however, wish to repay a lesser amount in response to a claim.
To do this you must use DIRR and set the signal on screen COT171J to show that you are making the repayment before the liability is finally established. This was formerly known as a provisional repayment. COTAX prints an appropriate message on the company notification.
You cannot use DIRR within 14 days of the normal due date (Word 49KB) for an AP where the overpayment arises.
Overpaid late payment interest
COTAX deals automatically with any late payment interest (LPI) the company may have overpaid. If the liability for an AP is reduced, COTAX automatically repays any excess late payment interest previously paid.