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HMRC internal manual

PAYE Manual

Reconcile individual: underpayments: over repayment of tax / supplement

There will be occasions where an over-repayment of tax / supplement is made. When this happens the over-repayment should be converted to a normal underpayment by means of re-reconciling the year and coded out unless

  • The payable order can be returned
  • The customer objects


  • The over-repayment is for an NPS out of date year (see CH56100 for recovery time limits and guidance at SAM112020)

If none of these apply you must re reconcile the year to include the over-repayment, this will then usually produce the relevant underpayment for coding out.

Where the re reconciliation results in an over-repayment that is less than the current tolerance, the tolerance should be applied and no further action should be taken to issue the calculation or recover the underpayment. For more information about tolerances see PAYE93075.

Where a calculation has already been issued for an underpayment case and you find that there is a further underpayment, the further underpayment should be notified and collected regardless of the amount, (unless you consider the HMRC Delay, Extra Statutory Concession A19 would apply - see PAYE95000 onwards).

You must issue an appropriate explanation to the customer and apply the normal underpayment processes, for example, through coding out or collection through work item 236 processes.

Note: In some cases where manual repayments were produced by using PORFS this has led to duplicated payable orders being issued. Do not apply tolerances when recovering these over repayments, the whole of the amount over-repaid (excluding repayment supplement) should be recovered.