SAM112040 - Repayments: recover over-repayment: over-repayments: recovery of a repayment made to charity

Taxpayer error

Where an over-repayment is made to a charity because the taxpayer has made an error on their return, the over-repayment will be recovered from the taxpayer.

When the return is corrected the amendment will create an over-repayment charge on the taxpayer’s SA record which will be pursued for payment as normal by the SA system.

HMRC error

Where an over-repayment is made to a charity because of HMRC error, the over-repayment will be recovered from the charity. These over-repayments will arise where the repayment was issued

  • For an incorrect and excessive amount
  • To the wrong charity
  • From the wrong SA record

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In these cases the charity will be contacted to advise them that an error has been made with a donation they have received and to request that the over-repaid amount be returned to HMRC. Following this contact if the over-repayment is not returned, a formal charge will be created to pursue the recovery of the over-repayment from the charity by using the formal DRIER (‘duty repaid in error refunded’) procedures.

This involves the creation of a formal over-repayment charge on the Strategic Accounting Framework Environment (SAFE) system. All DRIER charges are input direct to SAFE by the identifying office. A covering letter should also be issued to the charity explaining how the over-repayment arose, that a charge has been raised, and how the payment should be made.

The Miscellaneous Charges Unit will make two further written applications and a telephone call to the charity as required. If the over-repayment is repaid, it should be allocated against the DRIER charge and not the SA record.

If in response to applications or telephone call the charity requests time to repay the over-repayment, the request should be considered sympathetically and exceptionally some arrangements may exceed the time limits of the National Guidelines for payment arrangements.

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

Gift Aid

Where an over-repayment has been made to charity and Gift Aid has been applied to the original repayment, the charity is not entitled to a refund of tax on the over-repaid amount. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) HMRC Charities should be advised that an over-repayment has occurred in order that they can recover from the charity any tax already refunded on the over-repaid donation.

An e-mail should be sent to IR Charities, SA Giving (Specialist PT) advising that this is a case where Gift Aid was applied to the original donation but the donation is now over-repaid and providing the following details

  • SA reference
  • Name and address of the nominated charity (from the VIEW REPAYMENT screen)
  • Charity code (as captured from the return)
  • Date the repayment was ‘Issued’
  • Amount of the original donation / repayment
  • Amount of the original donation / repayment now over-repaid

An SA note should also be made using function MAINTAIN SA NOTES to confirm that HMRC Charities have been advised of the over-repayment.