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HMRC internal manual

COTAX Manual

Assessing: CTSA assessments: make / amend tax / penalty charges on same day

Whenever you make or amend an assessment using RAMA (Record / Amend Assessment) and your actions affect the penalty position for the specified period into which the AP falls, you see a choice of actions at the end of the function, depending upon the penalty position.

The options you see are:

  • allowing the automatic issue of penalties
  • proceeding to function PPEN (Prepare Penalty Determination) to issue or revise the penalty determination
  • setting the ‘no penalty required’ indicator.

You should normally select the automatic issue of penalties option when it is available.

It is important to note that if you make an assessment first and then select the automatic issue of penalties option, or use function PPEN to issue a penalty determination, any overpayment on the assessment will be repaid automatically and not allocated against any unpaid liability on the penalty determination.

This happens even when the penalty determination is made on the same day as the assessment and the company will receive a repayment and an application for payment within a day or two of each other.

You must stop this happening by using function MRSC (Maintain Repay / Realloc Signals (Company)) to inhibit automatic reallocations and repayments at company level.

This makes sure that COTAX:

  • reallocates the tax overpayment against the penalty charge
  • issues a payment application for the net penalty due or repays any remaining overpaid balance.

You must remember to unset the signal after COTAX has dealt with the reallocation so that automatic reallocations and repayments can continue.

If you find that you have issued an assessment that has caused an overpayment, selected automatic issue of a penalty or used PPEN to issue a penalty, but forgotten to inhibit repayments and reallocations, you can use function SREP (Stop Repayments) to stop the repayment, but only on the same day.

See:

  • COM100000 onwards for more information about penalties
  • COM23012 for a list of functions to use in particular situations.