Difficulties with one of her own clients alerted Rebecca Benneyworth to potential problems with repayments. With help from Shirley Martin in our Working Together discussion group, she has pieced together a guide to some of the main sticking points.
I started a thread in the Working Together Discussion Group last month on repayments. I had applied for a repayment for a CIS client on his tax return submitted a while ago. He contacted me to say he hadn’t received payment, so I applied for the repayment online. Checking a little later I found that his account still showed an amount available for repayment, and this was starting to look a little like Groundhog Day!
I subsequently found that there had been a problem with online repayment requests which was fixed recently, so I duly applied again. Still no joy!
Shirley Martin eventually came to my rescue with a valuable explanation on why repayments sometimes get “stuck”. Shirley wrote an article for the Tax Faculty in March 2009 on repayments. Members of the Faculty may be able to find it if they dig around a bit, but for the benefit of us all, as we go into the self assessment busy season, here is an edited version of Shirley’s helpful reply, with some added background and explanation.
“If the repayment does not arrive then it could be either INHIBITED or SELECTED. If you request a repayment on the return and it does not show as repaid on the taxpayer account this is the more likely explanation than the online problem." Online problems would only have affected online repayment requests in isolation (during the period of the issue) whereas if you made a request on the return and it was not repaid, the indications are that one of these two issues is present.
"If the repayment has been inhibited then something on the record, such as a no repayment signal, will have prevented the repayment from actually being created. So if you view the statement and the repayment is not shown as having been created, then it has been inhibited. If the repayment is shown on the statement as having been created but you haven't had the money then it will have been selected for security checks" (cue our dear friends in Bristol!).
Inhibited repayments
"If a repayment has been inhibited then there are various, usually non sinister, reasons for this happening. eg if the return had on it a change of address." The list of reasons why a repayment is inhibited are given in HMRC’s SA manual here. The list also includes a number of other factors, including a taxpayer who has a budget repayment plan agreed, or who is insolvent. The system creates an entry on a worklist so that the item can be checked before repayment is made, but you may need to prompt with a phone call to a call centre to trigger this.
As Shirley said “The no repayment signal sits on the record until the worklist item gets dealt with, which means that you can make online requests for repayment until you are blue on the face and none of them will work. What will work is a call to the Contact Centre. The person you speak to probably won't do the worklist item themselves but will pass it on to another team”. My call to the Agent call centre (0845 366 7855) indicated that the member of staff who took my call could not free up the repayment from her end, but she initiated a request while I was on the phone for the repayment to be released. You can see the sort of action needed to release repayments when they are inhibited in the Manual here.
However, it is clear from the manual that an extra check will be necessary when the repayment relates to CIS tax deducted. This might be the problem for my client – I shall await further developments. Those with clients seeking repayments may find this page a useful explanation of what happens in these cases - scroll down below the Table.
There is also a possibility that the client account has a manual "No repayment" flag on it. This can again arise for various reasons, including when an enquiry is open into the return. For more background on this area have a look at the Manual here.
Repayments selected for security checks
Shirley's guidance on this are was clear. "Once the repayment shows on the statement or client account, if you haven't had it after 10 days then it has probably been selected for security checks. You can confirm this by calling the Call Centre again but, unlike inhibited repayments, these days your call is unlikely to speed things up. It is always worth a try, just in case."
An article was included in Working Together issue 40 explaining the process when repayments were held for security checks: "Agents will recall serious difficulties with delays to Self Assessment repayments in late 2008 and into 2009. Those delays were addressed and have been under control since the middle of 2009.
The delays however highlighted another problem, namely that our computer systems showed repayments as made when they were in fact still subject to security checks. This had little impact when security checks were being done promptly, but when there was a backlog (as there was during the first half of 2009), this made things very difficult for agents, especially where arrangements were in place for the repayment to go to the agent. Not only were clients anxious about their actual repayments, but some were led to doubt what their agents were telling them.
What agents told us through Working Together (WT) enabled us to make the case for changing this. We made an interim change to the printed output so that customers were more clearly alerted to this security check situation. We have since then secured the funding and an IT change slot to make a permanent fix. This change is scheduled to be implemented in mid October, and from then on, paper and online outputs will show 'repayment pending’ from when the repayment is created until it's finally made. Only then will it be changed to 'repayment issued'. The amount of the pending repayment will also be shown."
Repay or hold?
Finally, as the due date for payment of tax in January approaches, one member of the group wondered whether HMRC might just withhold payment. Shirley was once again on hand to help out: “The SA manual says that, within 45 days of a liability becoming due, any amount available for repayment will be offset automatically. So from 15 or 16 December the SA system will automatically carry forward the repayment against future payments on account, just repaying the excess, and you don't need to do anything.
“If you file a return after 15 or 16 December, or have already filed it but the repayment was not requested and/or made by 15 or 16 December, should you want the full repayment to go ahead you will need to get the taxpayer to ring HMRC and ask for full repayment to be made. They can do this right up until the last minute. But the request does have to come from the taxpayer and not the practitioner because it is the taxpayer's liability.”
Well I’m waiting for word from my client that he has had his money (or not!), but thanks so much to Shirley for all of her valuable help on this topic. If members have any other special insights into some of the “back end” processes which create problems we would be very happy to run more articles of this nature – just point us in the right direction!