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HMRC internal manual

Self Assessment Manual

Repayments: issue repayment: S144 TCGA adjustments

This subject is concerned only with the clerical procedures that should be considered following notification of the exercising of an option under S144 TCGA. More detailed advice about S144 TCGA is provided in the Capital Gains Manual.

Where an option is exercised under S144 TCGA any tax charged on the original grant will need to be discharged by either set-off or repayment. Assessments, including self assessments, should not be amended following the exercising of an option. Taxpayers may notify their responsible office that the option has been exercised either on a return, or separately.

Since the assessment is not amended

  • The adjustment has no effect upon the payments on account for the following year, which remain in the amounts set up before the notification was made
  • The return figures for the year should not be changed
  • The overpayment due as a result of the exercise of the option should be calculated clerically. Where liability for any year is outstanding (or will become due within 45 days) the overpayment should be dealt with by set-off. Where there are no outstanding liabilities, the overpayment should be dealt with by repayment.

Adjustment by repayment / set-off

Where adjustment is to be made by repayment or set-off SA function CREATE FREESTANDING CREDIT will be used to enter a credit on the SA record.

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
  • 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 the return is 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 madeThe EDP attaching to the credit will be the date the tax is being set-off or repaid.

More detailed advice on creating a freestanding credit is provided in subject ‘Freestanding Credits’ (SAM110080).

Repayment supplement (RPS)

Whether the adjustment is made by set-off or repayment, it should include RPS which will run from the date of payment of the tax which is being set-off or repaid. This is the date or dates the original payment or payments were made against the relevant tax year or years that would become overpaid if the SA return / assessment were to be amended to give affect to the adjustments.