PAYE47096 - employer returns: employer return - overpayments: overpayments that include a tax free payment (Action Guide)

Where you receive a repayment request from an employer and the potential overpayment includes a tax free payment, also known as an incentive, follow steps 1 - 37 below. The Guide is presented as follows

Overpayment is for exactly £250 and relates solely to the incentive	Steps 1 – 13
Overpayment is for more than £250 and includes an incentive	Steps 14 - 16
Notional overpayment	Step 17
Ceased cases	Steps 18 - 37

For details of how to access any of the Employer Business Service functions use the [Index of Functions] button on the left of the screen

See subject ‘Overpayments That Include A Tax Free Payment’ PAYE47095 for

• Background information on the scheme
• The amount of incentive payment awarded each year

And

• Cases where the overpayment is less than £250

Note 1: Where the employer would have had an underpayment before the allocation of the incentive, the overpayment may be less than the £250 and this will then be automatically reallocated to the current year.

Note 2: From April 2008 the value of any overpayment automatically reallocated to the current year by BROCS was increased from £250 to £500.  This Action Guide is maintained to enable any overpayments as described to be worked.

Overpayment is for exactly £250 and relates solely to the incentive

Note: This situation may also arise for incentives paid for later years where the employer files online and has not self served. The amount of the overpayment will be determined by the amount of the incentive(s) awarded, but only overpayments for £250 or more will be generated on the monthly list - ‘End of Year overpayments not cleared’.

The following actions occur automatically

And

1. On receipt the EU will scrap EMO as ‘confidential waste’
   
   

Note: At this time the EMO cannot be stopped. The overpayment will also appear on the monthly list - ‘End of Year overpayments not cleared’

When the ‘End of Year overpayments not cleared’ list arrives

2. Use Function VIEW BROCS to identify if the overpayment relates solely to the incentive payment
   
   

Note: If the overpayment relates solely to the incentive payment the following will be shown. (This will be £250 for years 2004/05 and 2005/06 only. For other years the amounts shown will be less)

3. When the reason for the overpayment has been established take the following action
   
   

Or

Where the overpayment relates solely to the incentive payment

4. Use Function VIEW BROCS (Format 3) to check whether any payments have been received for the current year
   
   

Or

5. Contact the employer to ask whether the scheme is still required
   
   

Or

Where the scheme is no longer required

6. Use Function OVERPAYMENT DISPOSAL to repay the employer - follow Action Guide ‘Overpayments: Using Function Overpayment Disposal PAYE47126
   
   

Where the scheme is still required

7. Use Function OVERPAYMENT DISPOSAL to reallocate the overpayment to the current tax year
   
   
8. Write a letter to the employer to advise them of the reallocation and advise them to self serve for the amount of the overpayment when making payments in the current tax year
   
   

9. When the incentive payment has been reallocated make the year COYO - Follow Action Guide ‘Cancelled One Year Only’ PAYE21021
   
   

Where the overpayment does not relate solely to the incentive payment

10. Follow the instructions for ‘Overpayment more than £250’ - go to step 14
    
    

Where an employer subsequently asks the EU for repayment after it has been reallocated

11. Ask Banking Operations to move the overpayment back to the tax year CY-1
    
    
12. Banking Operations must reallocate the payment back to the tax year CY-1 and do not need to delete the RPI
    
    
13. When the reallocation back to the tax year CY-1 is complete
    
    

And

Note: If, after the reallocation has been made, the employer subsequently asks Banking Operations (rather than EU) for repayment, Banking Operations will follow their usual repayment procedures, but do not need to delete the RPI

Overpayment is for more than £250 and includes an incentive

Where the overpayment includes an incentive and the employer has not self served, or asked for repayment of the incentive and the total overpayment is over £250

14. The following actions occur automatically
    
    

And

15. The EU will scrap the EMO as ‘confidential waste’
    
    

Note: At this time the EMO cannot be stopped. The overpayment will also appear on the monthly list - ‘End of Year overpayments not cleared’

When the ‘End of Year overpayments not cleared’ monthly list arrives

16. Follow the instructions from step 14 in the ‘Overpayment Notification’ Action Guide PAYE47061
    
    

Notional overpayment

Where an overpayment arises that includes an incentive payment

17. Follow the instructions above to deal with the over payment using either the £250 or over £250 instructions as appropriate, but
    
    

And

Ceased cases

The incentive can be repaid to an employer who has ceased and has no outstanding PAYE arrears.

Most cases for the repayment of incentive payments, where an employer has ceased, will be carried out by Banking Operations. This guidance includes the instructions for handling cases that are received in the Employer Unit.

Repayments cannot be made to directors or agents of limited companies that have been struck off the Register of Companies at Companies House. For more details see ‘subject Overpayments and limited companies’ PAYE47070

Allocation of incentive payments for ceased employers

Any incentive payment made to a ceased employer is allocated to the PAYE record for the year of cessation.

18. Use Function VIEW BROCS Format 3 (Postings Summary) to confirm an incentive has been awarded
    
    

Repayment of incentive payments for ceased employers

An employer who cannot self serve can have the incentive repaid by cheque where all the following apply

And

When an Employer Unit receives a request for repayment of an incentive payment for a ceased employer, that is not a limited company which has been struck off the Register of Companies at Companies House

19. Use Function VIEW EMPLOYER SCHEME HISTORY to confirm whether the employer has ceased
    
    

Or

20. If the employer has ceased follow the appropriate instructions in the following circumstances
    
    

Or

Where the employer ceased and BROCS was reconciled or overpaid by less than £10 before the award of the incentive payment

You may identify these cases in any of the following ways

Or

Where you receive a request for repayment from an employer

21. Send a memo to Banking Operations (This text has been withheld because of exemptions in the Freedom of Information Act 2000)asking them to deal with the request attaching either
    
    

Or

22. Advise the employer that the request for payment has been passed to Banking Operations, who will deal with their request
    
    
23. Use Function AMEND EMPLOYER NOTES to record the actions taken
    
    

Where a case is identified from the monthly overpayments list

24. BF the case for 2 months to allow Banking Operations time to deal with any repayment request they may receive from the employer in response to the confirmation letter
    
    

Where the employer ceased and BROCS was overpaid by more than £10.00 before the award of the incentive payment

You may identify these cases in either of the following ways

Or

Where you receive a request for repayment from an employer

25. Use Function VIEW BROCS, Format 2 (Employer data year summary) to establish the amount of the overpayment
    
    
26. Where the employer has overpaid by the amount of the tax free payment(s) plus an additional overpayment of more than £10.00
    
    

And

Where the tax free payment has been dealt with by Banking Operations

Where the tax free payment has not been dealt with by Banking Operations

27. Use Function AMEND EMPLOYER NOTES to record the actions taken
    
    

Where a case is identified from the monthly overpayments list

28. BF the case for 2 months to allow Banking Operations time to deal with any repayment request they may receive from the employer in response to the confirmation letter
    
    

Where you receive notification that the employer had ceased before the current year and the incentive payment has already been allocated to (CY)

Where the employer return has been successfully filed online the incentive payment will be credited to the current tax year, as shown on BROCS Format 3 (Postings Summary). A confirmation letter will be sent to the employer.

Where the employer contacts the Employer Unit to request repayment of the tax free payment and the employer notifies us that he has ceased trading before the current year

29. Send a memo to Banking Operations asking them to
    
    

Then

30. Use Function AMEND EMPLOYER INDICATORS to set the Post Indicator
    
    
31. Use Function AMEND EMPLOYER NOTES to record the action taken
    
    
32. BF the case for 2 months to allow Banking Operations to deal with the repayment of the tax free payment
    
    

At the BF date

33. Use Function VIEW BROCS Format 3 (Postings summary) for current year to determine whether
    
    

And

If the total paid for the current year is now nil

34. Use EBS Function AMEND EMPLOYER SCHEME HISTORY to enter the cessation date
    
    

If the total paid for the current year is not nil

35. Ask Banking Operations to deal with the tax free payment shown on the current year
    
    
36. When Banking Operations have dealt with the tax free payment and the total paid is nil use EBS Function AMEND EMPLOYER SCHEME HISTORY to enter the cessation date
    
    
37. Use Function EMPLOYER NOTES to note your actions