PAYE47106 - Employer returns: employer return - overpayments: provisional repayments (Action Guide)

Where you receive a request from an employer to make a repayment before their annual return is fully processed follow steps 1 - 20 below. The Guide is presented as follows

Action	Step
Initial action	Step 1
PSC Scheme	Step 2
P or PSC Scheme (for all years)	Step 3
XP Scheme	Step 4
Other apparent overpayments where the return is RS1 or 3	Step 5
Employer does not want to wait	Step 6
Hardship cases	Steps 7 – 8
Where the case does not suggest genuine hardship	Steps 9 – 13
Where the employer is still not prepared to wait and the case does not involve genuine hardship	Step 14
Where the case does suggest genuine hardship	Steps 15 - 20

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

Note: Reference to CIS36 returns in this Action Guide applies to the old CIS Scheme for years up to April 2007 when 'New CIS' was introduced.

Initial action

Step	Action
1.	Use Function EOY RETURNS HISTORY to identify whether any of the following are displayed
-	A complete P35 is received for a P or PSC scheme and is at RSI1, and when viewing the P35 in EOY Return Details, the only entry on the P35 is for CIS deductions suffered, if so - go to step 3
-	For years up to 2007
-	A P35 is received for a PSC scheme and is at RSI2 or 3, and a CIS36 is subsequently received and is at RSI1, if so - go to step 2
-	Or
-	A CIS36 is received for a XP scheme, therefore an RSI is not displayed, if so - go to step 4

PSC Scheme

Step	Action
-	Where A P35 is received and is at RSI2 or 3, and, for years up to 2007 a CIS36 is subsequently received and is at RSI1
-	Note: In these circumstances the CIS36 will remain at RSI1 unless a further P35 is received after the CIS36
2.	You must
-	Investigate the potential overpayment in accordance with the ‘Overpayment notification (Action Guide)’, PAYE47061
-	And where the overpayment is substantiated
-	Use Function OVERPAYMENT DISPOSAL to provide the disposal instruction

P or PSC Scheme (for all years)

Step	Action
-	Where, for years up to 2007, a complete P35 is received and is at RSI1, and when viewing the P35 in EOY Return Details, the only entry on the P35 is for CIS deductions suffered
-	Note: In these circumstances the P35 will remain at RSI1 until dealt with by Central Exception Processing Team (CEPT), who will consolidate the P35 at RSI3. You can deal with these cases whether the P35 is at either RSI1 or RSI3
3.	You must
-	Investigate the potential overpayment in accordance with the ‘Overpayment notification (Action Guide)’, PAYE47061
-	And where the overpayment is substantiated
-	Use form P565 to dispose of the overpayment, and make the note ‘CIS deductions suffered’ in the ‘Special Circumstances’ box of the P565

XP Scheme

Step	Action
-	Where a CIS36 is received and an RSI is not displayed
-	Note: In these circumstances where the only return expected is a CIS36 an RSI will never be displayed
4.	You must
-	Investigate the potential overpayment in accordance with the Overpayment notification (Action Guide)’, PAYE47061
-	And where the overpayment is substantiated
-	Use Function OVERPAYMENT DISPOSAL to provide the disposal instruction

Other apparent overpayments where the return is RS1 or 3

5.	Advise the employer that a repayment cannot be made until their annual return has been fully processed

Employer does not want to wait

Step	Action
6.	Where the employer does not want to wait for their return to be processed, inform them that we are unable to make any repayment until after the year end when all the necessary returns have been received and processed. It will be their responsibility to ensure that the company is not dissolved before the overpayment is justified and repaid
-	Note: The former guidance included in this Action Guide about when you receive a request for repayment of an overpayment from a director of a company about to be dissolved has been withdrawn. We cannot accept any instructions before the company is dissolved for action afterwards. The directors will have to clear all the company affairs before they decide to dissolve the company.

Hardship cases

Step	Action
-	Where the employer claims that they need a repayment in the form of a cheque and will suffer genuine hardship as a result of waiting for their repayment
7.	Advise them that their request for a provisional repayment on account must be made in writing and must contain
-	Details of the amounts due, as shown on their submitted annual return for the relevant year, prior to the deduction of any payments made for the year
-	An explanation of how the employer believes the apparent overpayment has arisen
-	Details of the grounds as to why they will suffer genuine hardship if they can not wait until their return has been fully processed before a repayment is approved
-	When you receive the written request
8.	Consider whether their case does suggest genuine hardship, for example
-	Would the business fold, or be put into severe financial difficulties, without the provisional repayment being made
-	Or
-	For cessation cases, would the employer be unable to self serve (Word 24KB) or would the bank account be closed before the final repayment was received
-	Your next action will depend on whether the employer has provided information to show that they will suffer genuine hardship
-	If the case suggests the employer will suffer genuine hardship - go to step 15
-	Or
-	If the case does not suggest genuine hardship - go to step 9

Where the case does not suggest genuine hardship

Step	Action
9.	Write back to the employer and explain that they do not meet our criteria to make a provisional repayment, and inform them that they must wait for their annual return to be fully processed before any repayment can be considered
10.	Use Function AMEND EMPLOYER NOTES to note that we have received a letter from the employer with an explanation for an apparent overpayment for that year
11.	B/F the case for the return to be fully processed
12.	At the B/F date review the case to confirm that the return has been fully processed
-	If the return has not been fully processed re B/F the case for further review
-	Where the return has been fully processed - go to step 13
13.	Process the repayment request
-	Follow the appropriate guidance in this section of the Manual
-	And
-	Where CIS deductions suffered are involved follow the appropriate guidance in ‘Post capture checks’, PAYE46075

Where the employer is still not prepared to wait and the case does not involve genuine hardship

Step	Action
14.	Where the employer responds to the letter issued at step 9 and does not want to wait until the return is fully processed and the case does not involve genuine hardship, advise the employer
-	That you are unable to consider their repayment claim until their return has been fully processed
-	That provided a complete return has been submitted and if they filed their annual return online they have submitted all parts of their return and received their acceptance message
-	They still have the option to reduce their next monthly / quarterly PAYE payments for the current year by the amount they calculate as overpaid for the year of the return
-	If the anticipated overpayment fully covers their monthly / quarterly remittance, they must then submit a ‘Nil’ P30B payslip for the relevant months / quarters to prevent unnecessary payment reminders being issued to them

Where the case does suggest genuine hardship

Step	Action
15.	Use Function VIEW BROCS, Format 2, Employer data year summary to determine the total paid by the employer for the year of the return
16.	Compare the total amount shown in the employer’s letter with the amount shown at step 15, to determine the amount of the apparent overpayment
-	Where the provisional repayment request is for an amount of CIS deductions suffered, follow the appropriate guidance in ‘Post capture checks’, PAYE46075
17.	Write to the employer and advise them that a repayment will be made on a provisional basis which may be adjusted later when their annual return is fully processed
18.	Complete a form P565 Request Stencil (Word 43KB) and note in red ink ‘Repayment on Account - Hardship’ in the ‘Report of Overpayment’ box. The authorising officer must then note this in the form P565 ‘Special Circumstances’ box. Further guidance on this procedure can be found in PAYE47011
19.	Attach a copy of the employer’s letter to the P565
20.	Send the completed form P565 to Banking Operations (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
-	(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
-	(This content has been withheld because of exemptions in the Freedom of Information Act 2000)