Repayments: recover over-repayment: introduction
The majority of over-repayments made to SA taxpayers arise because of errors or mistakes made on returns by taxpayers or because of capture errors made by operators when capturing returns. These over-repayments are usually identified by processing offices and are recovered automatically through the SA record or by the formal ‘DRIER’ (Duty Repaid In Error Refunded) clerical procedures.
On occasion it can be the taxpayer that initially draws an over-repayment to the attention of the processing office following receipt or non-receipt of their repayment. In cases where the taxpayer advises that they have received an over-repayment, they should be advised to act immediately and return the payable order if not yet cashed. If the payable order has already been cashed or the over-repayment was sent by BACS, they should be advised to make payment of the over-repaid amount immediately.
From April 2004, with the introduction of Charitable Giving through SA, to April 2012 when the facility was withdrawn for all tax years, there was also the possibility that some repayments donated to charity may be over-repaid because of taxpayer or operator error. These over-repayments will be recovered as appropriate either from the taxpayer through the SA record or from the charity by using the formal DRIER procedures.
Cancellation of the repayment
If the status of the repayment is not yet showing as ‘Transmitted’ or ‘Issued’, the repayment can be cancelled on the SA record and reissued correctly (see section ‘Issue Repayment’, subject ‘Cancellation Of A Repayment’ (SAM110040).
If the repayment has a status of ‘Transmitted or ‘Issued’ it is too late to stop the repayment and it must not be cancelled on the SA record. But if the repayment was made by payable order it may still be possible to cancel the repayment if the payable order has not been cashed.
Where the repayment has a status of ‘Issued’ and was made by payable order you should contact Finance, Payable Order Services to confirm whether the payable order has been cashed.
- If the payable order has not been cashed, you should ask Finance for the authority to cancel the repayment in order that you can reissue it correctly
- If the payable order has been cashed, the appropriate recovery procedure that is SA system DRIER or assessment must be followed
Recovery of a repayment by the SA system
Where an SA repayment (see section ‘Issue Repayment’) is found to be excessive, for example following the processing of a return or amended return, the excess amount will be
- Identified on the next statement (as a collectible charge against the repayment)
- Pursued automatically by the SA accounting system (and will remain on the taxpayer’s record until the liability is cleared)
The SA system will identify those over-repayments that have arisen because a balancing charge credit (BCC) has been repaid, the return is subsequently amended and an over-repayment is created. Work items will be created for these cases which will populate the W044 ‘Over-repayments’ work list for clerical review.
The circumstances surrounding these over-repayments will be reviewed in accordance with the work list guidance and unless the over-repayments have arisen because of or have been affected by HMRC error or delay, the over-repaid amounts will be replaced by interest bearing over-repayment charges.
These charges will accrue late payment interest (LPI) from their relevant due date to the date of payment and will be pursued automatically by the SA system.
These interest bearing over-repayment charges will be shown on the SA statement with the descriptor type ‘OREP’ and transaction description ‘Over-repayment charge for yy/yy’. The adjustment to the over-repaid amount will be shown with the descriptor type ‘RAD’ and transaction description ‘Over-repayment adjustment on dd/mm/yy’.
Any repayment supplement created in SA that is over-repaid, is lost and will not be recovered.
Recovery of a repayment outside the SA system
There are several reasons why an over-repayment cannot be pursued by the SA accounting system, for example
- The repayment was not issued or recorded on the SA system and / or
- The repayment was issued to the wrong taxpayer and / or
- The repayment was issued from the wrong SA record and / or
- The repayment was issued for an incorrect and excessive amount and / or
- The assigned repayment was issued to the taxpayer in error
Previously the recovery of these types of over-repayments involved an initial informal application requesting the return of the over-repayment, followed by the formal ‘duty repaid in error refunded’ (DRIER) procedures if necessary.
From the start of Account 2001 these informal applications for payment were formalised and the ‘DRIER’ procedures revised. This resulted in the introduction of the three-part form R97.
Since the introduction of DRIER charges on the Strategic Accounting Framework Environment (SAFE) system in January 2007, all DRIER charges are input direct to SAFE by the identifying office. Therefore there is no longer any necessity to complete a form R97 to raise a DRIER charge.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Where fraud or negligence is suspected in a case of over-repayment, it should be referred to the Senior Officer in the identifying office.
Where an over-repayment that comes within HMRC delay in using information (ESC A19) (formerly Official Error) provisions is identified, it should be submitted to the appropriate officer for authority to remit under Class 5. Authority to remit should be given by the appropriate officer to the Charge Remitter - Recovery Office (SAM72072). For more information see section the Debt Management and Banking Manual (DMBM).