PAYE91005 - Reconcile individual: overpayments: repayments

This subject is presented as follows

System checks
Record keeping 
BACS
Payable orders

System checks

When a repayment has been calculated the system will apply pre-repayment checks. Where these checks are passed the system will issue the appropriate repayment and associated reconciliation documents and update the record.

Record keeping

Whenever you make a repayment you must

  • Make a note in Contact History with the details of the action taken
  • Make a note in Contact History with the details of where the claim papers are held

BACS

From August 2016 the majority of PAYE customers who are overpaid at the end of the tax year can claim their repayment by BACS via their Personal Tax Account (PTA).

From the 22 May 2024 a new service will be introduced for CY-1 Bacs eligible customers that will require them to take an action to receive either a BACS repayment or Payable Order.

PAYE customers who are eligible for BACS repayments will be advised on their End of Year Tax Calculation (P800) to either register online or use the additional online service to claim their repayment. BACS repayments will be sent directly into the customer's bank account within 5 working days after the date of claim.

When the BACS repayment service was introduced in August 2016 a small number of customers were not be eligible for BACS. For customers who are not eligible, the PAYE service will continue to issue payable orders using the current payable order process. (PAYE91037 see BACS Exceptions).

The repayment method will be ‘In Claim’ which will change to ‘BACS’ when the customer submits their claim online. A note is added to the PAYE record ‘BACS Repayment claim made’. The PAYE service will prepare and issue BACS requests overnight.

See PAYE91037 for further information on the BACS process.

Payable orders

Where a customer does not make a claim for repayment via their PTA, repayment is made by payable orders that are printed and despatched normally five days after the payment has been authorised. Form R37T is attached to the payable order and advises the total amount of repayment. It also advises that the full breakdown of the calculation is contained on an accompanying notice of assessment or tax calculation P800. This together with any other forms associated with the repayment, is sent to the payee in a separate envelope.

The repayment status will be updated from ‘Pending’ to ‘Issued’, and the ‘Issue Date’ noted on the record.

The overpayment status will be updated from ‘Outstanding’ to ‘Settled’.

The status of the Informal Tax Calculation will be updated from ‘Pending’ to ‘Issued’.

On receipt of a repayment request, the system will prepare and issue the payable order overnight.

The PAYE Service will

  • Update the repayment status from ‘Issued’ to ‘Paid’
  • Update the Payable Order number
  • Update the ‘Date Paid’
  • Add a note to the PAYE record 'R37'
  • Generate work item 230 to enable the post-repayment checks to be undertaken

Note: There is a 24-hour delay between the repayment being issued and the PO number being noted on the individual’s record.

From the 22 May 2024 a new service will be introduced for CY-1 BACS eligible customers which means there will be no automatic issue of payable orders. However, customers will still be able to contact HMRC to request a payable order or a cheque online, if they wish.