PAYE47061 - Employer returns: employer return - overpayments: overpayment notification (Action Guide)

If you receive an overpayment notification or claim to repayment follow steps 1 - 25 below. The Guide is presented as follows

Initial action

Steps 1 - 5

Overpayment to be referred to the Debt Management and ceased cases

Step 6

Is the value of the overpayment £500 or less?

Steps 7 - 8

Is the overpayment correct?

Steps 9 - 10

Contacting the employer or contractor

Steps 11 - 12

The employer replies

Steps 13 - 14

The employer does not reply or pro-forma return is required

Step 15 - 16

Unable to reconcile overpayment

Steps 17 - 19

Checking for other outstanding debts and / or returns

Step 20

Clearing overpayments

Step 21

Authorising overpayment

Steps 22 - 23

Completion of a form P565 Request Stencil

Steps 24 - 25

For details of how to access any of the Employer Business Service functions, use PAYE057.

Note: Potential overpayments relating to years 2005 onwards must only be investigated where the captured return displays a Return Status Indicator (RSI) of either RSI2 or RSI 3 in the View EOY Returns History screen.

Initial action

1. On receipt of any overpayment request / notification you must check the amount of the overpayment to ensure it is correct and all appropriate returns or return part for the year have been received and processed, including form P11D(b) where appropriate:

  • Use Function VIEW BROCS (DESIGNATORY DATA FOR ASN) (Format 9) to check whether a form P11D(b) is due or has been received
  • If form P11D(b) is not due go to step 4
  • If a form P11D(b) is due and you are investigating the overpayment before 6 July go to step 2
  • If a form P11D(b) is due and you are investigating the overpayment after 6 July go to step 3

2. If a form P11D(b) is due and you are investigating the overpayment before 6 July and the employer has not instigated the investigation of the overpayment:

  • BF your papers until 6 July to check if a form P11D(b) has been received
  • If a form P11D(b) has been received by 6 July, and you are satisfied that all appropriate returns or return parts have been received and processed, go to step 4
  • If a form P11D(b) has not been received by 6 July, go to step 3
    Or
  • The employer has requested the investigation of the overpayment
  • You must not withhold a repayment just because a form P11D(b) has not yet been received. (The P11D(b) is not due until 6 July). Continue in accordance with step 3

3. If you are investigating the overpayment after 6 July and the employer has not instigated the investigation of the overpayment:

  • If a form P11D(b) is due but has not been received the overpayment will continue to appear on the monthly overpayment list. Continue to BF your papers until the P11D(b) has been received
    Or
  • The employer has requested the investigation of the overpayment
  • Write to the employer to advise them that, according to our records we have not received all their returns due for the year of the overpayment, and, you are unable to investigate their overpayment until all their returns have been received

4. Use Function VIEW BROCS (EMPLOYER DATA YEAR SUMMARY) (Format 2) to check the amount shown in the COLL field agrees with the amount claimed / notified to you, and take a screen print:

  • If the amount agrees go to step 6
  • If the amount does not agree go to step 5

5. If the amount does not agree then your next action will depend on whether a revised overpayment arises or if there is now no overpayment

No overpayment

  • Note the notification ‘No overpayment due’ and use Function AMEND EMPLOYER NOTES to record your actions and then file the papers along with the screen print in the employer record pad
  • If a repayment claim has been received from the employer write to advise them of the position

Revised overpayment

  • Note the revised amount on the notification and go to step 6

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Overpayment to be referred to Debt Management and ceased cases

6. In certain circumstances the overpayment must be referred to the appropriate Debt Management office for action:

  • Use Function VIEW EMPLOYER INDICATORS to determine whether any of the following indicators have been set on the employer record
  • COLSTOP
  • P227
  • Use Function VIEW EMPLOYER SCHEME HISTORY to determine the status of the employer record and whether any of the following apply:
  • Succeeded out followed by a new employer reference - refer to Debt Management
  • Succession in followed by the old employer reference - refer to Debt Management
  • Date ceased followed by the date and scheme type (check same date shown on both EBS and BROCS - if not investigate and take steps to align the records, more information in PAYE21235)
  • If scheme type is DOME, DCNI, DPGEN or DPNI go to step 7
  • If the ceased employer is a Limited Company - check COTAX to see if company has been dissolved on the Companies House register, see PAYE47070

 Note: Strictly a company is ‘struck off’ the Register of Companies at Companies House shortly before it is dissolved. However, people often say ‘struck off’ when they mean ‘dissolved’. It is important to be sure of the position because only formally dissolved companies are caught by bona vacantia.

  • If the Limited Company is dissolved go to step 20, otherwise go to step 7
  • Check for outstanding debts on PAYE for other years and on other systems for example CTSA, CIS, CIS penalties
  • If there are other debts, go to step 9
  • If the company is ceased and you have identified a case from a work list and the only overpayments are for years CY-4 and earlier, prepare a pro-forma return, go to step 15
  • If the case needs to be referred to Debt Management:
  • Complete a form P28 and if known indicate on the form the reason for the net overpayment
  • Forward the form P28 to Debt Management with any relevant correspondence
  • Note the date the form P28 was issued to Debt Management on the overpayment notification and put this away in the employer record pad
  • Use Function AMEND EMPLOYER INDICATORS to set the year-related indicator INSTIND(1) for the year of the overpayment
    And
  • Use Function AMEND EMPLOYER NOTES to record the action you have taken

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Is the value of the overpayment £500 or less?

7. If the value of the overpayment is £500 or less, has the employer requested an investigation of the overpayment?

  • If Yes - go to step 9
  • If No, the overpayment can be reallocated - go to step 8

Note: If the employer has asked for the repayment of an overpayment of £500 or less already reallocated to CY.

  • Ask Corporate Treasury to repay, either by eForm or redirecting the employer’s letter 
    Or
    Ask Corporate Treasury to reallocate back to CY-1 and repay using Function OVERPAYMENT DISPOSAL - go to Step 22

8. Where the overpayment is £500 or less:

  • If the only overpayment is in current year (CY) and only for an incentive payment made for filing the end of year return in the previous year (CY-1)
  • Send a memo to Corporate Treasury (This content has been withheld because of exemptions in the Freedom of Information Act 2000) asking them to reallocate or repay the incentive
  • Corporate Treasury will process these requests within 10 working days. You should use this as a guide to reviewing CY being clear so that the scheme can then be ceased, follow action guide emp40034, otherwise
  • Use Function OVERPAYMENT DISPOSAL to reallocate the amount as follows
  • If the value of the overpayment does not exceed £10 reallocate to the Permanent Overpayment account (POP) and complete an Overpayment Reallocation Stencil - £10 or less (Word 46KB) and pass this with any supporting papers to your authorising officer and request them to use Function AUTHORISE OVERPAYMENT DISPOSAL to authorise the disposal instruction created
  • If the value of the overpayment is between £10.01 and £500 Check whether Current Year (CY) is open
  • If CY is not open and the scheme type is ‘P’ and ‘PSC’ prepare a pro-forma return - go to step 15
  • If CY is not open and the scheme type is ‘XP’
  • Check BROCS in POSTING DETAILS (Format 4) whether the CIS Charge is recorded FULL, PROVISIONAL, or INACTIVE. If the contractor contacts you about an overpayment and the PROVISIONAL indicator (which indicates that one or more monthly CIS returns are outstanding) is displayed, then ask them to contact the CIS Helpline on 0300 200 3210 (see note below)
  • Where the CIS charge is shown as ‘FULL’ or ‘INACTIVE’ go to step 11
  • Where the CIS charge is shown as ‘PROVISIONAL’ take no further action as the payment will be allocated to the ‘Full’ CIS charge once all the CIS Monthly returns have been received and captured
Note: Where you advise the employer / contractor to contact the CIS helpline 0300 200 3210, tell them that they will need to have details of all their monthly returns available when they call the helpline. The helpline staff will only be able to confirm the details provided by the employer / contractor about the returns recorded on the CIS system.

Note: A letter is not required when £500 or less is reallocated to the current year (CY) using Function OVERPAYMENT DISPOSAL because BROCS will automatically issue a letter.

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Is the overpayment correct?

9. Before overpayment disposal instructions can be given you must ensure you are able to show why an overpayment occurred and that the amount due is correct
 

For overpayments relating to a year from 2005 onwards

  • Use Function VIEW EMPLOYER EOY RETURNS HISTORY to obtain a screen print of the View EOY Returns History screen to confirm the captured return displays a Return Status Indicator (RSI) of RSI 2, unless the overpayment meets the criteria for making a provisional repayment as shown in the ‘Provisional repayments (Action Guide)’ at PAYE47106

For all years

  • Review the P228 charge information to see whether this agrees with the information held on the return(s)
  • Use ERIC tracking tool to check whether any returns are held but have not been processed 
    And where necessary
  • Use Function VIEW BROCS to look at the:
  • EMPLOYER DATA YEAR SUMMARY (Format 2) to ensure that the status is WWTD (Working with the district). If the status is not WWTD, review whether the case is working with Debt Management or Recovery and whether they are working the case. If you need to review the case and take any action contact the appropriate Recovery office to discuss the case and if appropriate request them to make the case WWTD
  • Payment postings position using EMPLOYER DATA YEAR SUMMARY (Format 2) and POSTINGS SUMMARY (Format 3) for the year
  • Ensure that any PAYE Advance (PAD) payments shown on the employer’s BROCS record for the current year (CY) have been settled prior to considering a repayment to the employer. For more information see ‘PAYE advance (PAD) payments’ at PAYE47100
  • Check whether there are any outstanding underpayments for other years which should be included in any conversations or on form P35D when contacting the employer to justify the overpayment
  • Where the return is an amended form P35 showing a reduction in the amount of PAYE and NICs due, when compared to the original follow guidance in PAYE47065

For PSC and XP Schemes for years 2008 onwards

  • For any CIS and CAM postings shown in POSTINGS SUMMARY (Format 3) check in POSTING DETAILS (Format 4) whether the CIS Charge is recorded FULL, PROVISIONAL, or INACTIVE. If the employer / contractor contacts you about an overpayment and the PROVISIONAL indicator (which indicates that one or more monthly CIS returns are outstanding) is displayed then ask them to contact CIS helpline 0300 200 3210 (see note below)
  • If there is a difference in the CIS deductions from subcontractors recorded on BROCS and the figure recorded at the ‘Deductions made from subcontractors box’ on the form P35, contact the employer / contractor to point out the difference and ask them to confirm the correct figure
  • If the employer / contractor agrees that the figures recorded on BROCS are correct, use Function EMPLOYER NOTES to record the details of your discussions
  • If the employer / contractor disputes the amount of the CIS charge notified to BROCS by the CIS system, refer the employer to the CIS helpline 0300 200 3210 (see note below)
  • The CIS charge indicators are also shown in DESIGNATORY DATA (Format 9)

Note: Where you advise the employer / contractor to contact the CIS helpline 0300 200 3210 tell them that they will need to have details of all their monthly returns available when they call the helpline. The helpline staff will only be able to confirm the details provided by the employer / contractor about the returns recorded on the CIS system.

Charge details will be passed from CIS to BROCS early in June and will then be updated daily. If you receive a request for a repayment before the charge details are passed to BROCS, inform the employer / contractor that the repayment will be made when all the expected returns have been processed and the actual overpayment established. If the employer states they cannot wait and they will suffer hardship, you can consider a provisional repayment as detailed in PAYE47105
And

  • Use Function VIEW EMPLOYER NOTES, check the employer record pad and any post on hand to review the information recorded

Following your checks

  • If you can agree the overpayment figure, go to step 10 

 Otherwise

  • If you are still unable to agree the overpayment figure, then overpayment disposal instruction(s) must not be given
  • You must take further steps to establish the correct payment position (for example pursuing an additional / correction return with the employer), see below
  • If the amount of the overpayment is greater than the difference between the amount of the CIS deductions taken from subcontractors shown on form P35 at box 23 and the CIS EOY charge recorded on BROCS
  • Write to the employer stating that you note that despite your earlier request, the CIS Monthly Returns have not yet been amended, and that you will not be making any repayment until the required amendments to the CIS Monthly Returns have been made
  • If the amount of the overpayment is equal to the difference between the amount of the CIS deductions taken from subcontractors shown on form P35 at box 23 and the CIS EOY charge recorded on BROCS
  • Write to the employer stating that you note that despite your earlier request, the CIS Monthly Returns have not yet been amended, and that you will not be making any repayment until the required amendments have been made
  • In both instances BF your letter for 4 weeks
  • At the BF date if no amendment to the CIS EOY charge has still been made on BROCS (CAM) then
  • (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
  • Create a Pro-forma (POP) P35 to match the amount of the overpayment
  • Make an EBS note that the overpayment should not be made for the year, until such time as the correct CIS EOY charge has been established, then file your papers
  • If however the CIS charge has been amended on BROCS (CAM) and now agrees the amount shown at Box 23 on the P35, then if any repayment is still due proceed as at step 20 below
  • If the employer in error sends you an amended CIS Monthly return (CIS300) then
  • Send this immediately to the CIS for processing
  • BF the case for a further 4 weeks to check that the CIS charge has been amended on BROCS (CAM)
  • If any repayment is still due after the amendment to BROCS proceed as at step 20 below

10. If there are entries on the form P35 for either of the following you must check if the employer reference appears on the ‘Post Capture’ work list

  • Tax Credits Paid to employees (TCP)
    And / or
  • Tax Credit Funding (TCF) 
    And / or
  • CIS deductions suffered (CIS)

If the employer reference appears on the ‘Post Capture’ work list you must follow ‘Post capture - 2007-08 onwards (Action Guide)’ at PAYE53012 to resolve all discrepancies relating to TCP, TCF and CIS

On 9 February 2007, all Tax Credit Paid (TCP) entries on the ‘Post Capture’ work list were removed and archived. Any entries for TCP discrepancies generated after that date will continue to populate this work list, but these new cases should only be reviewed where an employer overpayment arises. You must continue to work cases shown on the work list under the categories TCF and CIS

In all cases where you are required to investigate an apparent overpayment and the employer has paid tax credits, you must continue to reconcile any amounts of TCP shown on the relevant P35, even though there may not be an entry for that employer record on the ‘Post Capture’ work list

Note: If an employer tells you that they have paid Working Tax Credit after 31 March 2006 and / or has carried forward Tax Credit Funding into 2006-07, you should advise the employer to contact the Employer Helpline on 0300 200 3200 (text phone 0300 200 3212).

Following your Post Capture checks

  • If you establish the reason for the overpayment, go to step 20
     Otherwise
  • If you are unable to establish the reason for the overpayment, go to step 11

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Contacting the employer or contractor

11. If you have been unable to satisfy yourself how the overpayment arose you will need to consider contacting the employer / contractor or where applicable the agent or payroll agent, however, you do not need to contact the employer in the following circumstances:

  • If the overpayment is between £10.01 and £500 it can be reallocated to Current Year (CY) using Function OVERPAYMENT DISPOSAL, go to step 8
  • If the overpayment is £10 or less it can be treated as a Permanent Overpayment. ‘Net overpayments’ at PAYE47050 explains how to calculate this figure. If this is the case you must dispose of the overpayment using Function OVERPAYMENT DISPOSAL, go to step 21
  • If the employer or contractor has gone unknown and the scheme is not XP, prepare a pro-forma return, go to step 15
  • If a contractor has gone unknown or the current year is ceased and the scheme is XP, the overpayment can be treated as a permanent overpayment and must be disposed using the manual P565 process - go to step 23
  • If Debt Management has reconstructed the return
  • If the employer / contractor has already told you that they have chosen not to recover the full amount shown on the return
  • If either of the last two circumstances above apply, you must dispose of the overpayment manually using a form P565 Request Stencil to request the completion of a form P565 - go to step 22
    Or
  • If none of the above circumstances apply, you will need to contact the employer to establish how the overpayment arose - go to step 12

12. Contact the employer / contractor / agent or payroll agent, further information in ‘Agents and employers’ at PAYE20015, to establish the reason for the overpayment. Ensure where contact was made by telephone that a full note of the interview is completed:

  • When you have a reply from the employer - go to step 13
  • If you are unable to get an immediate reply by telephone or if the details are complex and are better sent in writing
  • Issue a form P35D to establish how the overpayment occurred
  • BF the papers for 4 weeks
  • If you do not have a reply to the P35D within 4 weeks - go to step 14
  • If you have a reply to the P35D - go to step 13

Note: If details of an overpayment are being sent to the employer / contractor using form P35D or a letter, ensure that the deductions on the CIS system match the amount claimed at the ‘Deductions made from subcontractors box’ of the P35 return.

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The employer replies

13. If you are satisfied that the explanation given by the employer adequately covers the overpayment - go to step 20

If you require further information to verify the overpayment is correct:

  • Issue form P35D, or where a P35D has already been completed write, to the employer to establish how the overpayment occurred
  • BF the papers for a further 4 weeks

14. Do you have a reply to form P35D or your letter

  • If you are satisfied that the explanation given by the employer adequately covers the overpayment - go to step 20

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The employer does not reply or pro-forma return is required

15. If there has been no reply after the BF review or a pro-forma return is required and:

  • If the company has ceased and no underpayment is identified, a pro-forma return should be used to capture an overpayment of any value
  • Where the employer has ceased and associated underpayments are identified, refer to Debt Management as detailed in step 6
  • If any payment has been received after 19 April - go to step 18 
    Or
  • If despite a reply from the employer you are unable to reconcile the overpayment - go to step 17

16. If there has been no reply from the employer or a pro-forma return is required and no payments are shown as received after 19 April or if you are reallocating an overpayment of £500 or less when the current year is not open:

 Note: Where this work is carried out by the Newcastle NIC-EO PAYE Employer Group, this step is not necessary because further checks are made by the QA team.

  • After authorisation use Function RECORD RETURN RECEIPT to record the receipt of a pro-forma complete return at RSI2 with no forms P14
  • Use Function CAPTURE EOY RETURN DETAILS to capture the information provided on the return. You must check the pro-forma checkbox to show that a pro-forma return has been captured
  • Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad

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Unable to reconcile overpayment

17. If despite receiving a reply from the employer you are unable to reconcile the overpayment:

  • Prepare a letter to the employer informing them that the explanation of the reasons for the overpayment is not adequate. Ask them for a further explanation and inform them that, unless a satisfactory explanation is provided, the payment will be permanently left on their record
  • BF the papers for a further 4 weeks
  • If the employer provides a satisfactory explanation - go to step 21
  • If you do not receive a reply or the explanation is still not satisfactory - prepare a pro-forma P35 to mirror the overpayment amounts held on the BROCS record (Format 2)
  • Prepare the P35 pro-forma return Authorisation Stencil and pass the papers and the P35 pro-forma return to the authorising officer 

Note: Where this work is carried out by the Newcastle NIC-EO PAYE Employer Group, this step is not necessary because further checks are made by the QA team.

  • After authorisation use Function RECORD RETURN RECEIPT to record the receipt of a pro-forma complete return at RSI2 with no forms P14
  • Use Function CAPTURE EOY RETURN DETAILS to capture the information provided on the return. You must check the pro-forma checkbox to show that a pro-forma return has been captured
  • Use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad

18. When the overpayment needs to be referred to Debt Management to investigate further:

  • Use Function AMEND EMPLOYER INDICATORS to set the year-related indicator INSTIND(1)
  • Keep a copy of the repayment papers use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad

19. Refer the overpayment to Debt Management to investigate:

  • Do this by completing a form P28 and attaching any relevant repayment papers that may be of assistance
  • Use Function AMEND EMPLOYER NOTES to make a note of the action you have taken
  • Use Function AMEND EMPLOYER INDICATORS to set the year-related indicator INSTIND(1)
  • Keep a copy of the repayment papers use Function AMEND EMPLOYER NOTES to record your actions and then file the papers in the employer record pad

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Checking for other outstanding debts and / or returns

20. Before clearing a justified overpayment checks should be made to establish whether there are any outstanding underpayments, debts or PAYE returns as follows:

Other years on BROCS

  • If there are underpayments on other years. Send an eForm to the appropriate Debt Management office advising them that we have justified the overpayment and ask them if they want to offset this against the underpayment or pursue the outstanding return(s)
  • If there are no underpayments, contact the employer and ask them to submit the outstanding return and inform them that the repayment will not be made until the outstanding return has been received and fully processed

When you receive a reply from Debt Management

  • Write a letter to the employer to confirm the reallocation

Other HMRC systems, for example CTSA, CIS, ECS, SAFE

  • If there are amounts due to HMRC. Contact the employer to let them know that you have found that another amount is outstanding and agree with them that the overpayment will be offset against the outstanding debt
  • Write a letter to the employer to confirm the reallocation
  • Issue a P565 Request Stencil to request the reallocation, go to step 24
  • If there is any remaining justified overpayment after clearance of any debts, go to step 21

Limited Company dissolved on the Companies Register

Where a limited company has been dissolved on the Companies Register, as detailed in PAYE47070, you do not need to contact the employer because the company is no longer a legal entity. If there are amounts due to HMRC for the company on other HMRC systems as above:

  • Issue a P565 Request Stencil to request the reallocation to cover the debts, go to step 24
  • If after reallocation there is any remaining justified overpayment due to the former company, (for example, Incentive overpayment, overpayment reallocated from a previous year, justified claim for CIS deductions suffered, and so on) this should be reallocated to the appropriate Bona Vacantia recipient. See ‘Bona Vacantia and dissolved limited companies’ at PAYE47070
  • Where the overpayment is not established as genuinely due to the dissolved company then Bona Vacantia will not apply. Capture a proforma return to cover the remaining overpayment
  • Go to step 24
  • When all the overpayment has been reallocated, the company PAYE scheme should be ceased, follow action guide emp40034

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Clearing overpayments

21. When you are satisfied that the overpayment is correct, you will need to decide what method of overpayment disposal is appropriate:

  • Automatic disposal - using Function OVERPAYMENT DISPOSAL
     Or 
  • Manual disposal - using form P565

When deciding which disposal method is appropriate you must review the employer record pad and employer record to establish whether there is an instruction to treat an overpayment in a particular way. For example to set any overpayment against another liability / employer record

To help you to determine which disposal method is appropriate see ‘Completion of form P565 request stencil’ at PAYE47020 and 'Using function overpayment disposal' at PAYE47125

  • If you decide that disposal can be made automatically using Function OVERPAYMENT DISPOSAL - go to step 22
    Or 
  • If you decide that disposal must be made manually using a form P565 - go to step 24

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Authorising overpayment

22. Where you establish the overpayment must be disposed of automatically:

  • Use Function OVERPAYMENT DISPOSAL to select the relevant year and disposal method
  • Forward the following to your authorising officer and request them to use Function AUTHORISE OVERPAYMENT DISPOSAL to authorise the disposal instruction created

For overpayments relating to a year from 2005 onwards

  • Screen print of View EOY Returns History screen confirming a RSI status of RSI 2, unless the overpayment meets the criteria for making a provisional repayment as shown in the ‘Provisional repayments (Action Guide)’ at PAYE47106

For all years

  • Screen print of BROCS EMPLOYER DATA SUMMARY (Format 2)
  • Screen print of BROCS POSTINGS SUMMARY (Format 3)
  • Any other evidence to substantiate the overpayment
  • Any supporting information from the employer record pad
  • A signed letter (plus 1 copy) to be issued to the employer or contractor advising them how you have disposed of the overpayment. The letter should advise
  • That we have dealt with their request for repayment and that the amount will be reallocated, transferred or repaid
  • That the repayment is subject to security checks that may delay repayment
  • Why the overpayment arose
  • Did they

Forget to account for any incentive payments made

Forget to account for an overpayment brought forward from a previous year

Enter an incorrect amount on their form P35 for an advance or reimbursement

  • If appropriate, to restrict their next payment to Corporate Treasury by the amount reallocated to the current year

Note: Where the disposal instruction is ‘Repay’, the disposal will be subject to additional security rules and may be referred to the Repayment Security Officer for review. This may delay the release of the disposal. Further information can be found in the ‘Using function overpayment disposal (Action Guide)’ at PAYE47126.

23. Where you establish the overpayment must be disposed of manually by using a form P565 you must

  • Complete a form P565 Request Stencil for referral to your authorising officer

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Completion of a form P565 Request Stencil

24. When completing the Form P565 Request Stencil you must:

  • Complete the whole of the left hand side of the form
  • Provide a detailed report of how the overpayment has arisen highlighting any special / unusual circumstances, for example write ‘Pro-forma Return’ in the ‘Report of Overpayment’ box if the only return for the year for the employer record is a pro-forma return
  • Tick all applicable sections on the right hand side of the form. Leave all other sections blank
  • When completing the ‘Details of Overpayment’ box put ‘M’ against ‘Tax’ or ‘NIC’ to show a minus amount where appropriate
  • Write the total amount of the repayment and the amount of the notional overpayment in the appropriate boxes on the form if the repayment involves a notional overpayment - see PAYE47055
  • Where an overpayment arises wholly or partially from Construction Industry Scheme (CIS) deductions for example where the CIS deductions recorded in ‘CIS deductions suffered box’ on the form P35 exceed the total liabilities due, you must note the ‘Report of Overpayment’ box ‘CIS deductions’
  • Where an employer requests a reallocation to CT - Note in the 'Report of Overpayment' box, details of the CT accounting period, for example 'Company request 01/10/08 to set off against CT for year ended 31/12/07', giving the date on which the employer requested the re-allocation, for example ‘Date request received 30/06/08’
  • Only use one form if you want to reallocate amounts to more than one year. Where the overpayment is to be allocated to more than one year include full details in the ‘overpayment report’ box on the left hand side of the form
  • Include details in the ‘notional overpayment’ box on the right hand side of the form if the repayment involves a notional overpayment
  • Attach evidence of the outstanding liability if the repayment, or part of the repayment is to be reallocated to another type of tax
  • Where a justified overpayment is for a dissolved limited company and it is to be reallocated to a nominated Bona Vacantia (BV) recipient, include in the ‘Report of Overpayment’ box
  • The name of the BV recipient
  • The amount of BV being sent
  • The name of the company
  • The company registration number CRN
  • Where an overpayment is to be repaid or reallocated to a third party, attach the authority from the employer. Any authority to repay must include the full name and address of the payee if any part of the repayment is to be repaid
  • Sign and date the P565 Request Stencil

25. Pass the completed form P565 Request Stencil to your authorising officer together with the following

For overpayments relating to a year from 2005 onwards

  • Screen print of the View EOY History screen confirming a RSI status of RSI 2, unless the overpayment meets the criteria for making a provisional repayment as shown in ‘Provisional repayments (Action Guide)’ at PAYE47106

For all years

  • Screen print of BROCS EMPLOYER DATA SUMMARY (format 2)
  • Screen Print of BROCS POSTINGS SUMMARY (format 3)
  • Screen Print of return details in ERIC tracking tool
  • All other evidence to substantiate the overpayment
  • The authority to repay where the overpayment is to be repaid to a third party
  • Evidence of the outstanding liability where the overpayment is to be allocated to another type of tax
  • Any supporting information from the employer record pad
  • A signed letter (plus 1 copy) to be issued to the employer / contractor advising them how the overpayment has been disposed of. The letter should advise
  • That we have dealt with their request for repayment and that the amount will be reallocated, transferred or repaid
  • That the repayment is subject to security checks that may delay repayment
  • Why the overpayment arose
  • Did they

Forget to account for any incentive payments made

Forget to account for an overpayment brought forward from a previous year

Enter an incorrect amount on their form P35 for an advance or reimbursement

  • If appropriate they must restrict their next payment to Corporate Treasury by the amount reallocated to the current year

Note: Where the disposal instruction is ‘Repay’, the disposal will be subject to additional security rules and may be referred to the Repayment Security Officer for review. This may delay the release of the disposal. Further information can be found in ‘Using function overpayment disposal (Action Guide)’ at PAYE47126.

On receipt of the P565 Request Stencil your authorising officer will consider the completion of a form P565.