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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: coding out: Self Assessment (SA) and Tax Credit (TC) overpayments: further TC points: customer objects to coding out

TC customers have the right to object to having their overpayment coded out at any time in the process.

We will encourage the customer to remain in coding out as it is an effective way of collecting the overpayment or try to agree an alternative payment arrangement.

We will not normally cancel coding out unless the customer agrees to another payment method. But, if the customer insists that they do not want the overpayment coded out, and will not make an alternative arrangement then we must remove it from the code.

If so, the overpayment will be collected by an alternative route which may include referral to a DCA. You must make the customer aware of this during discussion.

Actions to take on receipt of an objection to coding out

If the customer contacts us by letter or by phone objecting to coding out, you should establish if the customer has a PAYE source of income; for example, is employed or receives a UK-based pension.

Staff working in DTO campaign offices that have access to NPS can view NPS to establish details of the customers’ employment. Only agree to stop the coding out process if the customer either:

  • does not have a PAYE source
  • agrees to make immediate payment by debit or credit card
  • demonstrates that they are genuinely unable to pay in full and that collecting the overpayment over 12 months through their tax code will cause them hardship - you should negotiate an acceptable time to pay arrangement (our preferred method is by direct debit)
  • insists they do not want the overpayment coded out and our attempts to persuade them to keep the amount in the code or make alternative arrangements fail.

When negotiating time to pay:

  • check that the customer did not default on previous TTP arrangements
  • ensure that the customer is serious about their obligations to make payments on time
  • press for the shortest arrangement period possible
  • advise that if they no not keep to the arrangement we may pass the overpayment to a DCA.

See the appropriate Standard Work Instruction (SWI) for guidance on the actions to take following customer contact about coding out, including:

  • customer requires explanation of coding out
  • customer disputes the overpayment (debt dispute)
  • customer accepts coding out
  • customer claims to have paid
  • customer offers to pay in full
  • customer can not pay today, or agree TTP and does not have a PAYE source of income
  • customer agrees acceptable TTP
  • customer can not agree acceptable TTP, has a PAYE source of income but insists coding out cancelled
  • customer requests change of coding to other claimant
  • customer notifies of a Household Breakdown.