PAYE93040 - Reconcile individual: end of year reconciliation: tax calculation - reasons for overpayment screen

Note: You will need to be familiar with the contents of PAYE93036 (Tax Calculation Issues) before you proceed to authorise the issue of a Tax Calculation and, where you are called upon to review a tax calculation that has already been issued.

When a Tax Calculation is triggered and it results in an overpayment above tolerance, the system automatically selects the reason(s) as to why a customer is overpaid and the details concerned are displayed in one or both of the following overpayment reason screens

• Reason for Overpayment screen 1. The screen displays overpayment reasons under the heading of ‘The Following Included In The PAYE Code Was Higher Than The Amount Taxable’
• Reason for Overpayment screen 2. The screen displays overpayment reasons under the headings of ‘Other’

There are two different reasons as to why you may need to access the screens

• 1. To review / amend the reasons chosen by the system as part of the process required to approve a tax calculation for issue

• 2. To review the reasons that have already been accepted as being correct in respect of a tax calculation already issued or pending issue

The screens apply to all cases except cessation repayment claim cases (for which there is no requirement for you to record overpayment reason(s)) and in all other cases where they do apply, the way in which you access the overpayment screens differs in respect of each reason.

Reviewing overpayment reasons: approving tax calculations for issue
Reviewing overpayment reasons: tax calculations issued or pending issue

Reviewing overpayment reasons: approving tax calculations for issue

As part of the manual process to approve the issue of a tax calculation, once you are content with the calculation itself, you will automatically be taken to overpayment reason screens when you select the [Submit] button on the Tax Calculation screen (PAYE93037). The screens display (by having an indicator present in the checkbox next to the appropriate reason) the reason(s) the system has chosen as to why the customer is overpaid. You will need to review the reason to ensure they agree with those that you found prior to determining that the calculation itself was correct. When you do this and you

• Agree with the reasons chosen by the system, you do not need to take any further action with regard to them and you should proceed (by selecting the [Submit] button on screen 2. towards authorising the tax calculation to be issued
• Do not agree with reasons chosen by the system you should amend them by selecting any new ones and deselecting any you consider to be invalid, before you proceed further towards authorising the tax calculation to be issued

Where you approve the tax calculation reasons there must be at least one reason and no more than 5 reasons in the overpayment reasons screens to describe why the customer is overpaid. If there is not at least one reason or there are more than 5 and you authorise the reasons, you will receive an appropriate message telling you to correct matters before proceeding to approve the calculation (see hyphenated entries 3 and 4 below where there are more than 5 reasons).

Where

• A reason for the overpayment is ‘Non Cash Benefits’, instead of selecting an appropriate checkbox on the reason screens, you should select the ‘Other’ option on screen 2. and enter a free text note of ‘None Cash benefits were more than the amount coded’ in the Reason field
• The standard overpayment reasons do not apply you should select the ‘Other’ option on screen 2. and enter a free text note (of up to 50 characters including spaces) in the Reason field as to why the overpayment occurred
• The system has identified more than 5 overpayment reasons, and 5 of them will provide the customer with a meaningful explanation of the overpayment

• • Deselect the least relevant overpayment reasons to leave the 5 most relevant present
  • Approve the tax calculation for issue

• The system has identified more than 5 overpayment reasons, and 5 of them will not provide the customer with a meaningful explanation of the overpayment

• • Make a note of the reasons selected by the system
  • Deselect all of the reasons
  • Select the ‘Other’ option on screen 2. and enter a free text note of ‘ A letter explaining the overpayment will follow’ in the Reason field
  • Approve the tax calculation for issue
  • Prepare and issue a letter to the customer explaining the overpayment reasons

Any non- standard reasons you enter into the ‘Other’ Reason field as to why a customer is underpaid must be valid as they will be printed on the Tax Calculation (P800) issued to them.

Having selected the reason(s) from screen 1. or 2., you must now select the repayment recipient on screen 2. The recipient can be one of the following

• Individual
• Agent
• Capacitor
• Nominee

When you have selected a recipient and used the [Submit] button on the ‘Overpayment Reason 2’ screen

• In a case where the calculation concerned is being undertaken as a single year reconciliation and

• • A nominee was selected as the repayment recipient, you will be taken to the ‘Insert Repayment Recipient’ screen
  • An agent, capacitor or individual has been selected as the repayment recipient, you will be taken to the Reconciliation Summary screen, the tax calculation will be set to ‘Pending’ (issue) and you do not need to take any further action

• In a case where the calculation concerned is part of a multiple year reconciliation, you will be taken to the Multiple Year Reconciliation Summary screen to allow you to approve (PAYE96225) or cancel (PAYE96235) the calculations concerned. In cases where you subsequently approve the calculations and

• • A nominee was selected as the repayment recipient, you will be taken to Contact History and once you have completed and submitted the screen concerned you will be taken to the ‘Insert Repayment Recipient’ screen
  • An agent, capacitor or individual has been selected as the repayment recipient, the calculations will be set to ‘Pending’ (issue) and you do not need to take any further action

In nominee cases, at the point at which you are taken to the ‘Insert Repayment Recipient’ screen, you will need to enter the name, address and bank details following which you will need to confirm the entries by selecting the [Submit] button. This will set the tax calculation(s) to ‘Pending’ (issue) and you do not need to take any further action.

Note: For multiple year reconciliations you should only complete the nominee details on the latest tax calculation being issued (PAYE96220).

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Reviewing overpayment reasons: tax calculations issued or pending issue

To view the overpayment reasons printed on a Tax Calculation (P800) that has already been issued or, where the calculation concerned has a status of ’Pending’ (issue), you access the overpayment reason screens by selecting the [P800 Reasons] button on the appropriate Tax Calculation screen.

In a case where your review indicates that the overpayment reasons recorded on the system are incorrect, where the tax calculation

• Has already been issued, you cannot alter the reasons already printed / to be printed on the Tax Calculation (P800) issued to the customer
• Was done as a single year reconciliation only and it is pending issue, you should proceed as follows to ensure that the reasons that will appear on the Tax Calculation (P800) subsequently issued to the customer are correct

• • Access the appropriate Tax Calculation screen and cancel the calculation using the ‘Cancel Tax Calculation’ action link
  • Re trigger reconciliation for the year
  • View the revised tax calculation and update the overpayment reasons linked to it as required
  • Approve the calculation for issue

Note: Where a customer has both overpayment and underpayment reasons in a year and the year end result is that they are overpaid, the system will identify / display the overpayment reasons only. As a consequence of this, in a case where the calculation being reviewed forms part of a multiple year reconciliation and the customer

• Is overpaid in the year in isolation but the year end result is that they are underpaid (due to a large underpayment being brought forward into the year), the system will identify an underpayment reason for the year of ‘This calculation includes an underpayment for an earlier year’
• Is underpaid in the year in isolation but the year end result is that they are overpaid (due to a large overpayment being brought forward into the year), the system will identify an overpayment reason for the year of ‘This calculation includes an overpayment for an earlier year’

The reason(s) will be printed on the Tax Calculation (P800) issued to the customer and you may receive contact from them in which they ask for a full explanation of the calculation. Where this is so, you will need to fully review all aspects of the case / year (for example Coding and Employment History and the benefits coded in the year against those in the tax calculation), to explain the calculation.