Repayments: issue repayment: freestanding credits
Freestanding credits (FSC) can be created either
- Automatically, for Schedule 1B Carry Back claims made in the first version of a return for 2001-2002 and later years
- Manually, for all other circumstances, through the use of function CREATE FREESTANDING CREDIT
Automatic freestanding credits
Where an individuals’ first version of their return includes a Schedule 1B Carry Back claim, the computer system will automatically create freestanding credits in respect of the claim. These will appear on the record the next working day and will be allocated against any appropriate SA charge.
Note: Freestanding credits cannot be automatically created for stand alone claims or new / amended claims within an amended return. These must be dealt with manually.
The effective date of payment (EDP) for each automatic freestanding credit will be set automatically by the computer following normal EDP rules. For more detailed information on effective dates of payment see subject ‘Effective Dates of Payment’ (SAM110070).
The SA system is not required to set the ‘No Repayment’ signal when a freestanding credit is created automatically.
But following the creation of an automatic freestanding credit, a work item will be created and entered on the ‘Freestanding Credit Review’ work list. This will be shown on the work list as ‘3 Automatic’.
Where a repayment is requested on the return, this will be automatically repaid, along with RPS where appropriate, subject to usual automatic repayment rules.
Where a repayment is not requested on the return but is requested at a later date, the function ISSUE REPAYMENT FROM OVERPAID BALANCE must be used to issue the repayment and any RPS payable on the automatic freestanding credit will have to be calculated manually.
Manual freestanding credits
SA function CREATE FREESTANDING CREDIT will be used where a credit, including any manually calculated repayment supplement (RPS), is to be entered on the SA record for an individual or trust. This function will be used where, for example
- An in-year repayment is to be made for a CIS deduction
- Relief is to be given in respect of a stand alone claim or a new / amended claim within an amended return, to carry back of losses or pension contributions
- A set-off is to be made from a PAYE overpayment
- A credit is authorised where the customer did not receive the benefit after the repayment was made to a third party in cases where, for example, the repayment was made to the agent who did not pass it on to his client. And, as a result of a FIS enquiry, the agent is charged with criminal offences and the matter is considered by the criminal courts. In these cases, a free standing credit would be the appropriate method to recompense the customer, upon receipt of the appropriate authority to do so
Following the use of this function
- A credit will be created on the SA record which will be available for repayment or allocation against an SA charge
- A work item will be created and entered on the ‘Freestanding Credit Review’ work list. This will be shown on the work list as ‘1 Creation’
- The ‘No Repayment’ signal will be set automatically. (The setting of this signal will prevent an automatic repayment and possible over-repayment being made when a later return is received). The signal can be unset immediately providing all returns for the years affected by the repayment request have been received.
- You will be taken to function VIEW STATEMENT, from which you may want to access function ISSUE REPAYMENT FROM OVERPAID BALANCE. If repayment is not appropriate, you should exit that function
- You should use SA function MAINTAIN SA NOTES to enter a brief note recording the fact that a repayment / set-off has been made
The effective date of payment (EDP) attaching to the freestanding credit will automatically be set as today’s date. You will only need to enter an EDP if it is other than today’s date. More detailed advice on effective dates of payment is provided in subjects ‘Repayment Set-Off’ (SAM110220) and ‘Effective Dates of Payment’ (SAM110070).
Cancelling a freestanding credit
When a return is unlogged any automatic freestanding credit(s) created by that return will be automatically cancelled.
Note: In cases where the repayment created by the credit has been made by Payable Order, before cancelling the FSC, you should check if the PO has been cashed. If the PO has not been cashed you will need to request cancellation. When it has been cancelled and authority has been obtained to reissue the repayment, the FSC can be cancelled and recalculated as necessary. For further information see SAM110041 ‘Cancellation of a Repayment’ and SAM112001 ‘Recover over-repayment’.
In all other circumstances, use function CANCEL FREESTANDING CREDIT if you want to cancel a freestanding credit.
Following either of the above
- The credit previously entered on the SA record will be cancelled
Note: This will reverse any previous allocation where the original credit was allocated to a charge or repaid
- A work item will be created and entered on the ‘Freestanding Credit Review’ work list W024. Freestanding credits cancelled manually will be shown on the work list as ‘2 Cancelled’. Those cancelled automatically will be shown as ‘4 Automatic Cancellation’
Amending a freestanding credit
If you want to amend either a manually created or automatically created freestanding credit
- Use function CANCEL FREESTANDING CREDIT to cancel the original details
- Use function CREATE FREESTANDING CREDIT to enter the revised details
The use of functions CREATE FREESTANDING CREDIT and CANCEL FREESTANDING CREDIT will cause a work item to be created and entered on the ‘Freestanding Credit Review’ work list.
Automatically created and cancelled freestanding credits will also cause a work item to be created and entered on the ‘Freestanding Credit Review’ work list.
Work items will be notified to the office responsible for the processing activity of the record on which the freestanding credit was created and will be subject to review by the officer with the user role of Clerical Processing Manager.
In view of the nature of this work list it is for immediate action and should be reviewed daily.
A work item is not deleted automatically from this work list. The work item should therefore be deleted manually using function WORK LIST CASES or function SELECTED CASE on completion of the necessary action.