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HMRC internal manual

Self Assessment Manual

Repayments: recover over-repayment: over-repayments: recovery by the SA system

Where an SA repayment is found to be excessive, for example following the processing of a return or an 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)

Over-repayment charges
Interest on over-repayment charges
Over-repaid Free Standing Credits

Over-repayment charges

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 Revenue error or delay, the over-repaid amounts will be replaced by interest bearing over-repayment charges.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Any repayment supplement created in SA that is over-repaid, is lost and will not be recovered.

Where an interest bearing over-repayment charge is created on the SA record

  • If the relevant due date of the charge is within 45 days of the statement issue date, or has passed, the charge will appear on the taxpayer’s next statement
  • If the relevant due date of the charge is more than 45 days in the future, the charge will appear on a future statement that is issued within 45 days of the relevant due date of the over-repayment charge

Special action will be required where the payable order has not been cashed and it is returned by the taxpayer. This is detailed in the Action Guide (SAM112031).

These new charges will be shown on the 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’. Where the due date, tax year or amount of the over-repayment charge are incorrect, or the charge requires cancellation, you should follow the steps in the Over-repayments: recovery by the SA system: interest bearing over-repayment charges (Action Guide) at SAM112032.

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Interest on over-repayment charges

The new over-repayment charges accrue late payment interest (LPI) from their Relevant Due Date to the date of payment and will be pursued automatically by the SA system.

When the taxpayer receives the next statement, this will show either the over-repayment as the only liability outstanding or the over-repayment amount plus other liabilities outstanding and a message stating that late payment interest (LPI) will be charged.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

If the taxpayer disputes interest raised on an over-repayment charge, the interest charge must not be sent to the Interest Review Unit before the processing office has first checked / confirmed that the over-repayment charge itself has been correctly raised. For example, confirmed that there was no HMRC error or delay relating to the over-repayment charge and it was raised in the correct amount.

Once the processing office have confirmed that the over-repayment charge is correct but the taxpayer still objects to the interest charge and the objection cannot be resolved locally, only then should the interest charge be submitted to the IRU.

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Over-repaid Free Standing Credits

If following the repayment of a Free Standing Credit (FSC) it is established that the FSC created is excessive or has been created on the wrong SA record, the full amount of the Free Standing Credit should be cancelled using the SA function CANCEL FREESTANDING CREDIT.

However, where the repayment created by the credit has been made by Payable Order, *before *cancelling the Free Standing Credit, you should check if it has been cashed. For further information follow the guidance at SAM110041. Also see SAM112001 `Recover Over-repayment’. Then, when confirmation has been received that it has been cancelled or not, and authority has been obtained to reissue the repayment, if appropriate, the free standing credit can be cancelled and recalculated as necessary.

Following the cancellation of the FSC

  • In cases where the FSC was excessive and the repayment was made by a method other than Payable Order, if appropriate a new FSC for the correct amount should be created and the net over-repayment will be recovered by the SA system
  • Where the FSC was created on the wrong SA record, a further FSC should be created on the correct SA record followed by the repayment if still appropriate. The over-repayment now created on the first SA record will be pursued by the SA system

A note should be made on the relevant SA record(s) using function MAINTAIN SA NOTES.

Note: In all cases, the taxpayer should be provided with an explanation of the over-repayment and told how the excess amount will be recovered.