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DMBM210275 - Payment Allocation, Repayments and Overpayments: IRIS: Handle Excess Payments

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Handle Excess Payments (HEP):

  • provides automated handling and disposal of overpayments
  • applies to charges on the D/E Masterfile except for Schedule E


An overpayment may arise whenever a:

  • payment
  • charge amendment
  • stand-over with classification `I' (set by the Processing Office where a further postponement application has been made under TMA70/S55 (4)) is processed

HEP deals with most overpayments automatically, either by reallocation to other outstanding charges (including interest charges) or by repayment.

Where repayment supplement is appropriate HEP includes it in the reallocation/repayment.

Repayment/History Store

Overpayments disposals, as above, are handled by the ‘Repayments System’. How a particular overpayment has been disposed of (including in repayment cases the payable order number) is recorded in the HISTORY STORE within the Repayment System.

The HISTORY STORE contains notification codes

  • 1-4 concern reallocations
  • 5-8 relate to direct repayment or mixed repayment/reallocation cases

IRIS Function VHEP

You will be able to view the HISTORY STORE by using IRIS Function VHEP. Instructions on accessing this function are in the IRIS User Guide.

HEP Reallocation Rules

HEP will reallocate overpayments to outstanding amounts in the following order.

  1. To other amounts on the assessment on which the overpayment has arisen as follows
  • tax
  • National Insurance
  • interest already charged
  • interest chargeable as a result of the reallocation.
  1. To other charges (to the taxpayers advantage) as follows
  • any amount standing over with code R
  • collectible tax and NIC (in order of due date of the interest package, and where there are two or more packages for the same due date the earliest assessment)
  • interest already charged
  • any interest charged raised as a result of the reallocation
  • suspended amounts
  • to reduce remissions posted as codes 1, 2, 4, 7, X (in order of original due date (latest first) to minimise any interest).

When Automatic Reallocation Will Not Occur

HEP will not reallocate when

  • one or more of the following signals are set or conditions apply
  • P in A
  • No reallocation
  • No repayment
  • RLS
  • AS repayment
  • P in I
  • EO
  • PLA code is value `D'
  • Stop code is set
  • Interest code is 8
  • Special Issue (except value `4')
  • a remission posting other than Class 1, 2, 4, 7 or X is shown on the taxpayers record (see below)
  • the number of separate reallocations required would be more than 50.

Instead these overpayments are allocated to OAS, and DMB Banking will deal with these cases clerically on receipt of the Daily OAS Statement.

Remission Posting Identified

Where the remission Class is 1, 2, 4, 7 or X a minus remission is automatically posted and the payment allocated.

Where the remission Class is other than 1, 2, 4, 7 or X the overpayment is put to OAS for clerical attention. DMB Banking will receive notification of the overpayment on the Daily OAS Statement, and they will ask the office who input the remission to reduce it to allow the overpayment to be allocated.

Where you receive a request for a minus remission to be input in the above circumstances

  • prepare a form 495 for authorisation
  • input the minus remission using IVT INP517

If the request is made by the Processing Office, DMB Banking will make the case Local Action (LA) when the minus remission is input. LA will automatically be cleared when the overpayment is reallocated.

Repayment Considerations

Where, following reallocation (if any), an overpayment remains this will normally be automatically repaid byHEP.

When Automatic Repayment Will Not Occur

HEP will not repay when

  • the amount is less than £1
  • the amount is £150,000 or more
  • PLA code is value `B'
  • any of the signals/conditions referred to in the section, ‘When reallocation will not occur’ are set/apply.

Amounts of less than £1 will be transferred to ‘Permanent Overpayments’. The other exceptions will be transferred automatically to OAS and dealt with clerically by DMB Banking on receipt of the Daily OAS Statement.

Note: Where an overpayment is directly caused by the posting of a payment (that is the amount paid exceeds the amount required to satisfy the charge at the time it is posted) any repayment will be delayed for at least 14 days. This is to avoid any problems which might arise if, for instance, a cheque is subsequently dishonoured. During this period the amount involved will be held in OAS.

Notification To Taxpayer

Any reallocation of more than £10 and all repayments will be notified to the taxpayer automatically. In repayment cases the payable order will be an integral part of the notification.

The notification will show a HISTORY STORE number. This resembles, and is derived from, the taxpayer reference but it is not exactly the same.

Repayment Cancelled

Where a repayment is subsequently cancelled by DMB Banking, for example where a payable order is returned RLS, the repayment posting in the HISTORY STORE will be marked ‘CAN’ and the amount transferred to OAS for clerical action.

IRIS Signals

There are various signals relating to HEP as follows

No repayment By the Processing Office
No reallocation By DMB Banking
Nominee/set-off By the Processing Office
P in I By including ‘V’ on a payslip in the ‘For official use only’ box
EO When a transfer to Enforcement Office is processed