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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Repayments: repayment supplement: calculation of repayment supplement

Under SA, repayments are made only at the taxpayer’s request, any overpayments being held on the taxpayer’s record until they are claimed or automatically reallocated (for example when a new charge becomes due).

Repayment supplement (RPS) accrues on the taxpayer’s record until a qualifying overpayment for RPS purposes is repaid or reallocated. The SA system will maintain a record of interest rates and the periods to which they apply.

Any RPS due will be included with the amount of repayment so that a single amount is repaid. The make up of the repayment is explained in the repayment notice R1000(CS).

From November 2001, the amount of RPS shown on the repayment notice R1000(CS) could be made up of two elements

  • The RPS amount payable on the actual tax being repaid

And, if appropriate

  • Other RPS amounts credited to the taxpayer’s record following earlier set-offs / reallocations but not previously claimed.

Details of any RPS calculated are shown on the taxpayer statement, unless repayment is handled through OAS.

Where more than one sum of RPS arises on a credit / payment, these amounts will be summarised on the statement issued to the taxpayer. However, full details are shown on the taxpayer’s SA record and can be seen by using function VIEW STATEMENT.

Calculation of RPS for automatic repayments and reallocations

Following capture of the SA return the majority of repayments will, where repayment is claimed, be generated automatically. The calculation and payment of RPS for these repayments will also be automatic.

Note: There was a change to the way that the system dealt with reallocations from 28th January 2000.

  • Prior to 28th January 2000, when an overpaid amount was re-allocated, RPS was calculated from the effective date of payment (EDP) to the later of the relevant due date (RDD) of the charge and the date of re-allocation.

This meant that where re-allocation took place after the RDD, the taxpayer was given RPS and was also charged interest for any common period running from the later of the RDD or EDP to the date of re-allocation.

Further information about dealing with ‘common period’ cases is provided in subject ‘Repayment Supplement / Interest Charges (SAM111030)

  • From 28th January 2000, where an overpaid amount is re-allocated, the system uses the effective date of payment (EDP) for calculation of RPS and so RPS will only be given if the taxpayer makes payment earlier than the Relevant due date (RDD) of the charge.

The amount on which RPS has been calculated can be identified using function VIEW STATEMENT.

Calculation of RPS for non-automatic repayments and reallocations

Where function ISSUE REPAYMENT FROM OVERPAID BALANCE is used to make a repayment, RPS if applicable, will be calculated automatically.

RPS will need to be calculated clerically on repayments / reallocations handled through OAS following the use of

  • Function TRANSFER FROM OVERPAID BALANCE

Or

  • Function TRANSFER FROM TAXPAYER CREDIT

The office using one of the transfer functions will need to notify disposal instructions to the relevant Banking Operations office by form SA331 (available for completion and printing from SEES) to enable them to calculate and repay any RPS due.

It is important to confirm prior to completion of the form SA331 whether the credit / payment qualifies as an overpayment for RPS purposes and does have the possibility to attract RPS.

Repayments of RPS handled through OAS will be subject to existing clerical and supervisory procedures at each Banking Operations office. See section ‘Issue Repayment’ (SAM110000 onwards) and the Debt Management & Banking Manual (DMBM) for more information.

If function CLERICAL REALLOCATION is used to reallocate credits then the RPS consequences will need to be considered and dealt with clerically.

Where function CREATE FREESTANDING CREDIT is used any RPS that is due for the period prior to the credit being entered on the SA record will need to be

  • Calculated manually

And

  • Included in the total amount of the freestanding credit entered on the SA record

Further information about creating a freestanding credit is provided in subject ‘Freestanding Credits’ (SAM110080).

Details of the dates from which RPS is payable on certain payments and credits is provided in subject ‘Effective Dates of Payment’ (SAM110070) (Set-offs/reallocations, repayments and RPS).

IRIS function SARI

IRIS function SARI (Self Assessment Repayment Interest) will enable you to

  • Calculate RPS manually
  • Deal with enquiries from taxpayers and agents about the basis of calculation of RPS
  • Produce a screen print of the calculation which can then be sent to the taxpayer or agent

Note: You may find minor differences between the amount of RPS produced automatically by the SA system and that calculated by SARI. The calculation produced by SARI is correct. However, no attempt should be made to adjust the figure generated by the SA system.

More detailed advice about how to use function SARI is provided in the IRIS User Guide.

Determining whether an amount qualifies for RPS

In all cases, to qualify for RPS the amount being reallocated or repaid must be an overpayment for RPS purposes.

Determining the period for which RPS due

Having qualified for RPS the period for calculation of RPS is determined using certain rules.

  • The ‘from’ date

    • For payments, is the effective date of payment (EDP) (SAM110070). Function VIEW STATEMENT will give you this date
    • For Balancing Charge Credits (BCC’s), is the fixed filing date of that year’s return (31 January following the end of the tax year). However where the BCC is to be set off or reallocated against a non-SA liability or an earlier year within SA, the ‘from’ date may be amended to the date the return was received if earlier than the fixed filing date.
    • For Free Standing Credits (FSC’s) can vary depending on the reason for creation of the FSC. For further advice on EDP’s for FSC’s see subject ‘Effective Dates of Payment’ (SAM110070) (Set-offs /reallocations, repayments and RPS)’.

    Note: Under SA the EDP cannot be earlier than 6 April 1996

  • The ‘to’ date depends on whether the overpayment is being repaid or set-off / reallocated

    • For a repayment, it is the projected date of issue of the repayment

    Or

    • For a set-off / reallocation to a different UTR or another head of duty, RPS is calculated to the date the set-off / reallocation is made. Where the set-off / reallocation is to another charge under the same UTR, RPS is calculated to the relevant due date of the charge, against which the credit / payment is now being allocated.

    Where the overpayment has an EDP after the Relevant Due Date of the charge, then it will not attract RPS. (Reallocations handled through OAS will be subject to existing procedures)

  • The from date is included and the to date excluded to determine the number of days for which RPS is calculated