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HMRC internal manual

Debt Management and Banking Manual

HM Revenue & Customs
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Pre-enforcement: coding out: Self Assessment (SA) and Tax Credit (TC) overpayments: NPS(PAYE) will perform a hypothetical call to code

IDMS will send details of each debt separately to NPS(PAYE) subject to the total being between £100 and £17,000.00 to check the customer’s record to see if the debt can be coded out in the current year plus one.

NPS(PAYE) will:

  • trace and match the debt to the customer’s record
  • check customer is not deceased
  • check customer has a PAYE source against which the debt can be coded
  • conduct a coding check taking into account the customer’s level of income and other underpayments to be coded to ensure the:

    • total of the amount is up to £17,000
    • inclusion of the debt does not take more than 50 per cent of their income.

NPS(PAYE) will prioritise debts to be coded out in the following order:

  • PAYE Potential Underpayments
  • PAYE Underpayments
  • SA Balancing payments
  • debts from IDMS in the following order:

    • earliest date sent
    • largest debt
    • class 2 NIC
    • SA debt over tax credit overpayment if both on the same day for same amount.