When you transfer all or part of a specific payment that is allocated to a charge you will trigger a re-allocation if
The reallocation causes the system to consider whether any interest liability and / or repayment supplement (RPS) arises. This action can disadvantage the taxpayer. Where you
refer to ‘Payment allocation and transfer’ (
SAM80050) and then the Debt Management
and Banking Manual (DMBM).
For an explanation of how interest and RPS is calculated
see:
Re-allocation and interest
Re-allocation and RPS
When a payment is re-allocated to a charge a review of the interest position takes place automatically.
An interest charge is created if an interest bearing liability
is cleared and payment was made late. The due date of the interest
charge is the date it was created. The automatic payment allocation
rules make use of this due date to determine the allocation of the
next payment credit.
A review of the interest position can also cause an interest
charge to be discharged where, for example
Where following a review interest is discharged, a fresh interest charge is raised when the full liability is cleared. For more information see section ‘Interest’ ( SAM60000).
In the case of an unallocated amount any interest is calculated
from the relevant due date of the charge to the effective date of
payment (EDP) (see
SAM60055).
Where the amount re-allocated is an overpaid amount, up to
28th January 2000 any interest was calculated from the Relevant Due
Date (RDD) of the charge to the date of re- allocation.
If re-allocation of an overpaid amount took place after the
RDD of the charge, the taxpayer was given RPS and charged interest
for the common period which ran from the later of the RDD or EDP to
the date of re-allocation.
From 28th January 2000, where an overpaid amount is
re-allocated, the system uses the EDP for calculation of RPS. This
will only be given if the taxpayer makes payment earlier than the
RDD of the charge. Interest is also calculated from the RDD of the
charge to the EDP of the overpaid sum. This avoids a common period
arising for RPS and interest.
Whenever an overpaid amount is re-allocated, the system
calculates any RPS for a qualifying payment and shows the amount on
the taxpayer record.
Prior to 28th January 2000, when an overpaid amount was
re-allocated, RPS was calculated from the effective date of payment
(EDP) to the later of the Relevant Due Date (RDD) and the date of
re-allocation. Where re-allocation took place after the RDD, the
taxpayer was given RPS
and charged interest for the common period which
runs from the later of the RDD and the EDP to the date of
re-allocation.
The amount on which RPS has been calculated can be
identified using function VIEW STATEMENT. The RPS start and end
dates normally equate to the effective date of payment and the
posting (‘Created’) date respectively of the
corresponding re-allocated amount on the taxpayer record.
Note however, that the posting (‘Created’) date
of the re-allocated amount does not correspond with the RPS
calculation end date where a re-allocation to a charge with a
future RDD is involved because RPS is calculated to the future RDD.
A balancing charge credit (BCC) has an effective date of
payment (EDP) that corresponds with the filing date, normally 31
January after the end of the tax year. RPS applies from the EDP
whether the BCC was allocated to a charge or not.
From 28th January 2000, where an overpaid amount is
re-allocated, the system uses the EDP for calculation of RPS and so
this will only be given if the taxpayer makes payment earlier than
the RDD of the charge.
No RPS is due in respect of an unallocated amount.
For more information about RPS see section ‘Repayment
Supplement’ (
SAM111000).
