COM122010 - Repayments / reallocations: non automatic reallocations: reallocation into COTAX - responsible CT office

This subject is presented as follows

General
Set off an interest bearing amount against COTAX
Set off interest against COTAX
Set off a SAFE repayment against COTAX 

General

Where you have a credit that needs to be set-off against a COTAX AP you should use Function DSET (District Set Off) to create the relevant posting on the AP record(s). Details of each set off will be passed to OAS (Word 24kb) and a receipt will be issued to the taxpayer.

You need to use Function DSET (District Set Off) to

• Create a credit posting (such as Research & Development)

• Set off an interest bearing amount against a COTAX liability

• Set off interest against a COTAX liability

You should not use DSET to set off an overpayment arising on a SAFE record, including CT61 charges, against COTAX. The SAFE unit will reallocate or repay an overpaid charge (see COM23132).

The use of DSET may

• Satisfy an existing liability for the AP on which you have made the set-off
• Create a re-allocation to cover unpaid liabilities on other APs
• Create an overpayment

• Depending on the circumstances of the case, a combination of all or any of these events

COTAX treats the amount you set off using Function DSET as a payment made

• For the AP you set it off against
• On the EDP (Word 41kb) that you enter

The EDP you enter must be the date from which the company should be given credit for the set-off for interest purposes.

You cannot undo a DSET posting once you have made one. You must get it right first time. (This text has been withheld because of exemptions in the Freedom of Information Act 2000) 

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Set off an interest bearing amount against COTAX

When you use Function DSET the table below shows you what EDP to use when setting off the following interest bearing types of duty into COTAX.

Note: For further details on all types of tax credits see CTSA material dates (Word 112kb) for full details.

For these types of duty

• Select ‘N’ for the ALLOCATE TO DUTY TYPES AUTOMATICALLY field and then allocate the set off to tax. This will allow COTAX to calculate any Repayment Interest that is due

See Action Guide 'Repayment Interest' (COM125094) in section ‘Non Automatic repayments’ in this business area for a CT Pay and File AP or a CTSA AP.

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Set off interest against COTAX

When you use Function DSET to set off interest, the EDP is the date the set-off is made for

• Repayment interest
• Repayment Supplement
• Late payment interest on CT (APs prior to 01/10/93)
• Late payment interest on IT or ACT

For these set offs

• Select ‘N’ for the ALLOCATE TO DUTY TYPES AUTOMATICALLY field and then allocate the set off to interest. You need to do that, otherwise COTAX will calculate Repayment Interest when it is not due, as the payment type is not Corporation Tax

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Set off a SAFE repayment against COTAX

Where you have an overpayment on a SAFE or in respect of a CTA charge that has been archived and is being reduced (see COM23132)

• For the same AP
• The EDP is the normal due date (9 months and 1 day after the end of the AP)
• For other APs
• The EDP is the date on which the amount of the repayment is agreed. (This will be the amount of tax and any interest payable, as calculated manually.)

• Refer to the Common Period Rules on the COTAX Intranet site under ‘Where to get help’

You must not use DSET to set-off the overpayment, including CT61 charges, against COTAX.

You will need to complete a SAFE Repayments stencil (SAFE 1) and give it to your SAFE user who will set the ‘No Repayment’ signal on SAFE if necessary and send the form to the SAFE team at Accounts Office Shipley. You can get the SAFE 1 stencil at Excel > SEES > Forms and Letters > under the ‘SAFE’ category.

You should complete the stencil and enter ‘Repayment Set-Off’ in the space given to provide the reason for your repayment. Then give full details of the reason and if appropriate details of any repayment supplement/interest that is due including the ‘from’ and ‘to’ dates for all non S455 CTA 2010 (formerly S419 ICTA 1988) charges in this space.

There is a separate section for you to complete where repayment interest is due for S455 charges. Where repayment interest is due you will also need to supply the ‘to’ date in order for the SAFE team to correctly calculate the interest due on the set-off.

Enter the UTR, AP number and duty type of where the overpayment is to be allocated to in the ‘Repayment Nominee’ box.

The SAFE team will arrange to reallocate the overpayment to the COTAX charge using OAS.

See Relief Instruction (RE) Manual at RE3195 regarding the calculation of Repayment Supplement for a pre-COTAX AP.

Notes: 

For a list of forms relevant to this subject, see COM122011.

For a list of functions to use in particular situations, see COM122012.

For legislation applying to this subject, see COM122013.