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HMRC internal manual

PAYE Manual

Reconcile individual: overpayments: making a repayment

All repayments will be issued by cheque (payable order) up to and including 31 July 2016. Note: As from 30 October 2017 a payable order cannot be sent direct to a UK Bank / Building Society because of changes within the Banking Industry. HMRC cannot issue a repayment to a foreign bank account. You must not set up an SA record for the sole purpose of making a PAYE payment through BACS. All repayments that are made through SA should be supported by a completed SA return, or stand-alone claim to back up the reasons for making the repayment.

From 1 August 2016 most individual PAYE customers who are overpaid at the end of the tax year will be invited to claim their repayment by BACS. PAYE customers who are eligible for BACS will be advised on their End of Year Tax Calculation (P800) to register on line with their Personal Tax Account and claim their repayment through the ‘Your Tax Account’ service. BACS repayments will be sent directly into the customer Bank Account within 3-5 working days after the date of claim PAYE91037.

Unless the customer has clearly indicated that they will not be working again before 6 April you should not treat the claim as a P50 and should not input the date of claim in to the IABD screen. An unemployment type reconciliation will generate a new P45 and P52 to be issued to the customer, which enables the customer to maintain a cumulative code throughout the year.

When a cheque (payable order) is being sent to a nominee (someone other than the individual) you should ensure that the payable order is correctly addressed by completing the Record Repayment Recipient field in the PAYE Service Reconciliation. Further information about nominees can be found at PAYE91040.

As well as tax calculations that you have created, there are also processes that go on behind the scenes that will trigger automatic reconciliation. Where automatic reconciliation identifies an overpayment the repayment will default to the individual unless the individual is deceased when it will be issued to the capacitor. See also PAYE103055.

Further instructions on using the PAYE Service Reconciliation functionality can be found at PAYE93000 onwards and in action guide tax40015.

Keeping records
Temporary references
Foreign workers
Expatriate cases

Keeping records

You should always keep claim forms and papers giving details of the preparation of payable orders

  • Pin or tag all the repayment papers together with any printouts or repayment calculations on top
  • Note the District Reference (DR) on the top paper, if this is not already shown on the printout
  • Update Contact History with details of the action taken
  • Update Contact History with details of where the claim papers are to be retained
  • Put the papers in the DR in alphabetical order

Temporary references

Before you make a repayment for a record that holds a temporary reference, you must use NINO Quick Search to make sure that there are no other records for the customer, either with a National Insurance Number or with a different temporary reference.

A customer cannot always be linked to a single temporary reference, and there is an increased risk that they may receive the benefits of two sets of Personal Allowance for a year.

You must therefore check that there are no other records for the customer.

Where repayment is made on the basis of a P60 you should cancel the P60 by stamping it with a date stamp and noting the temporary reference on the copy that is retained in the office or on the P36B SEES.

If someone with a temporary reference produces a P60 with a NINO, before making any repayment you should check to establish if a record is held under this NINO and or use function Trace and Match Individual (PAYE120010 refers) to trace the record. If a duplicate record is found then the records should be merged using Merge Individual (PAYE104025 refers).

Foreign workers

You must be certain that for foreign workers the correct form has been received. You should have received a P46 / P46(EXPAT) when they started employment in the UK. Where a migrant worker leaves the UK any repayment claim should be made using the form P85.

When making any repayment, you should check to see what the customer’s intentions were on entering the UK and if they have bought or leased accommodation for a period of 3 years or more, as this may have a bearing on the repayment and residency position. You should obtain this from the customer before making any repayment.

Expatriate cases

If the PAYE Service record has an Expat or HNWU interest the case should be referred to the relevant Expat / HNWU Team.