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HMRC resists repayment of PAYE overpayment

HMRC resists repayment of PAYE overpayment

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I was not aware that I can find PAYE statements on my HMRC online account. Due to an allocation problem I stumbled on it. I discovered that I have a credit from an overpayment in 2010/11. Due to the peculiar accounting practice of HMRC, this was not automatically carried forward. I have asked for repayment and received the following reply:
"Prior to any repayment or reallocation of this overpayment we must first of all establish that it is genuine. We will therefore require an explanation as to how this overpayment came about. I would suggest checking the information submitted on the end of year return is correct. Secondly check the payments you have made against the information on the end of year return. Once we have received a satisfactory explanation and the overpayment proves to be genuine arrangements can then be made for its repayment."

I have no idea how this overpayment came about and would appreciate advice how to respond. Obviously, I would not like to trigger a tax investigation.

Many thanks in advance!

Replies (21)

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By halesir
11th Sep 2013 12:22

PAYE Overpayment

This is standard Revenue practise. They always assume that what is paid over is correct. Why would you pay more than you need to is their argument. You will need to review your PAYE due and paid and see how the overpayment has arisen, then explain it to them.

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By Gunda
11th Sep 2013 12:27

Thanks very much for your quick reply! In other words, if I am unable to explain, I won't be able to get this "overpayment" back? 

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By johngroganjga
11th Sep 2013 12:34

Correct - but just look at the numbers giving rise the apparent overpayment (i.e. the P35 for the year and the sum of the 12 monthly payments made in respect of the year) and explain how the discrepancy between two figures that should be the same arose.

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By cassarlaws
11th Sep 2013 12:57

But dont expect them to be quick......

Had a client which overpaid last year, basically he came into a bit of cash and took it upon himself to pay the whole year upfront, as per a budget of PAYE/NIC costs for the year. When time came to submit the P35 an over payment of some £900 became apparent. A letter was set out to HMRC explaining the position and backing up with numbers and requesting a repayment, which they agreed to. Due to "staff shortages" and "backlogs" we were given a timeframe for turnaround of around eight weeks. Nineteen weeks later, I have just heard that they intend to process the payment in up to 16 weeks time.  In the meantime my client has received letters asking to "confirm his postcode" --  despite it being on the letter, as well as a letter asking who his agent was - a copy of which was posted from HMRC to me, his agent. Plus a whole host of other bizarre occurances such as phones calls from HMRC asking to what the repayment amount was, or informing it would be issued today etc etc etc. I have always found HMRC to be either quick and efficient, or a little slow but still efficient, and recent dealings with CGT, SA and CT depts have, if anything, got a little better in these regards but on the Employer side I think things have fallen over somewhat. Anyone else with similar experiences? To the OP I would ensure you keep on top of it, weekly phone calls and letters else they will spin you in circles!

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By David Franks
11th Sep 2013 13:36

I posted this same thing last week under the title 'surely HMRC are acting illegally'.

They actually told me on the phone that my clients human error was not an allowed reason so if you pay twice by accident they claim that gives them carte blanche to keep the money. 

They cant invent rules that superceed the law of this country so ultimately you could just take them to the small claims court. 

 

 

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By Moonbeam
11th Sep 2013 14:07

The way I handle it..

If I didn't do the payroll myself I check the paperwork to ensure it agrees with the P35, and then check the payments actually made. I then ask the client why they would have overpaid. They tell me they have no idea.

I then write to HMRC saying payroll figures are correct, but client was very busy on date of overpayment, and didn't have time to check he was paying exactly the right amount. He therefore thought it best to pay what would be more than enough on the assumption that an honest mistake in HMRC's favour would not be penalised later.

This problem hasn't arisen for me recently, but I agree HMRC are acting in a dishonest manner by not crediting the money to the current year's PAYE without question.

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By Kirkers
11th Sep 2013 14:24

I remember reading on here about an accountant who simply replied to a similar letter saying that ''as HMRC acknowledge the overpayment in their letter dated 'enter date here' then I will be starting proceedings to recover the money via small claims court first thing tomorrow as I bare no obligation to explain why the overpayment had occurred.'' From what I remember he said he received a cheque for the full amount not long after!

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By TalithaFreedman
11th Sep 2013 15:51

Same scenario happened to us. There were two separate payments on our account that resulted in an overpayment; one was a duplicate payment the other an overpayment. As you'll probably guess, these are examples of "reasons the HMRC cannot accept to justify an over payment" as per the notice of overpayment letter we received from the HMRC. HOWEVER the quote above was proceeded with "with no further explanation". Our explanations...the overpayment was due to a software malfunction which meant we couldn't obtain an exact figure so an estimated figure was paid to avoid a late payment fine from the HMRC, the duplicate payment was due to a mis-posting in our accounts leading us to believe we had not yet paid our PAYE liability for month x (granted I had to explain exactly where it was posted, why it was left there for several months etc etc which really was none of their business quite frankly!). Along with a transaction history which included our newly found information, this seemed to enough to justify the overpayment and it was refunded via a credit on our account. To be honest it did take a couple of months to resolve and looking back I wish I had thought of tashkirkman's suggestion above. If the HMRC acknowledge there is an overpayment on account they have no reason to hang on to it! It seems to me HMRC’s excuse for their approach (however honest) is they just want you to make sure the discrepancy definitely lies within the payments made and not on the P35 before making a refund. Perhaps keeping that mind when penning an explanation will help? Good luck!!

 

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David Ross
By davidross
16th Sep 2013 12:09

Awful behaviour by HMRC

I have had a couple of cases going back years, which took years to resolve. How would you cope with a Bank that reallocated payments, added interest and charges etc but would not send you a statement? HMRC arrogantly says that the Employer must keep proper records but that it will not provide any printouts of transactions.

Of course from now on these transactions will be available online (as they are for other taxes) but HMRC seem to have got rid of the staff way before introducing this service (still not available on the agent portal). I resorted to Data Protection Act requests. Eventually HMRC seem to have relented and just made the repayments.

 

It seems to be a matter of "we ask the questions ...."

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Replying to sarah douglas:
Tom McClelland
By TomMcClelland
16th Sep 2013 13:40

No supporting detail online under RTI

davidross wrote:

I have had a couple of cases going back years, which took years to resolve. How would you cope with a Bank that reallocated payments, added interest and charges etc but would not send you a statement? HMRC arrogantly says that the Employer must keep proper records but that it will not provide any printouts of transactions.

Of course from now on these transactions will be available online (as they are for other taxes) but HMRC seem to have got rid of the staff way before introducing this service (still not available on the agent portal). I resorted to Data Protection Act requests. Eventually HMRC seem to have relented and just made the repayments.

 

It seems to be a matter of "we ask the questions ...."

You can see what you've paid online, but there is no online detail of the employee PAYE/NI deductions that led to the liability, and therefore no possibility of reconciling the balance using information from HMRC. The situation is akin to a bank which tells you how much you're in credit or overdrawn, but won't give you a statement.

We've lobbied since the inception of RTI planning for detail to be available to download to employers/agents, but without success so far.

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By magocks
16th Sep 2013 12:10

Difficult HMRC

I have had a client who overpaid by £70 in error for the 2010/11 tax year. It has only come to light and HMRC are refusing to repay this. We stated that it was overpaid in error but HMRC want a satisfactory explanation of the overpayment. I don't know how many different ways to say it was an honest mistake but the HMRC officer seems to believe this is not a genuine reason and is refusing repayment. Funny that HMRC believe the ordinary taxpayer cannot make an honest mistake given the number of mistakes HMRC make over the years costing billions. Anyway HMRC believe it is worth their while writing letters back and forward to us to refuse to repay a paltry amount of £70 which was overpaid in error by an honest hardworking man. Seems HMRC prefer to waste their officers time and effort in this way rather than chase the likes of Vodafone, Google or Starbucks.

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Replying to NH:
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By whopkinscom
16th Sep 2013 12:21

Simples. Make an honest

magocks wrote:

Anyway HMRC believe it is worth their while writing letters back and forward to us to refuse to repay a paltry amount of £70 which was overpaid in error by an honest hardworking man.

 

Simples. Make an honest mistake and underpay by £70 this year! Or am I a little too naive?

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Replying to stepurhan:
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By sparkler
16th Sep 2013 12:55

Takes ages.

whopkinscom wrote:

magocks wrote:

Anyway HMRC believe it is worth their while writing letters back and forward to us to refuse to repay a paltry amount of £70 which was overpaid in error by an honest hardworking man.

 

Simples. Make an honest mistake and underpay by £70 this year! Or am I a little too naive?

Unfortunately this still wouldn't sort out the problem, as HMRC would not have reallocated the £70 overpayment to the current year.  So last year would still show as overpaid by £70 and this year would show as underpaid by £70.  It will still be necessary to enter into the ridiculous rigmarole of correspondence that HMRC require simply to get an overpayment realloated to the current year.  

I have found that the best approach for providing HMRC with "evidence" is to send them a simple spreadsheet showing:

Column A: Amounts due for PAYE/NI for each month

Column B: Amounts paid per bank account (hopefully backed up by HMRC's online records - apply for a Gateway account if you don't have one already, then you can see the monthly allocations).

Column C: explanation of any difference.  Usually the client has simply paid the wrong amount, so I usually explain it along the lines of "I told the client to pay x but due to human error in typing the figures into their online banking system they paid y instead".

 

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Replying to stepurhan:
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By arnold28
16th Sep 2013 14:08

Too Naive

You are too naive. We have a number of situations where HMRC are threatening legal action for underpaid PAYE in 2012/13 when in fact they have overpaid far in excess in 2011/12. Getting HMRC to reallocate the overpayments is an never ending ding dong between departments.

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Replying to NH:
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By shoshana
16th Sep 2013 16:21

Why would HMRC chase Vodaphone, Google or Starbucks?

They haven't broken the law - they have complied with their UK tax obligations. If you/the country feel they have not paid sufficient tax then that is the fault of the tax code, not the companies that comply with it.

Malcolm

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By lijaloo
16th Sep 2013 12:19

same again

I have one client who overpaid in 2009/10 according to HMRC.  When I telephoned initially and explained their situation, only an employer because they employ carers using social services direct payments and they always paid what they were advised by the organisation who did their payroll at the time confirming that the P35 was correct from information I which had been passed to me.  The explanation was accepted and I was told that a refund would be issued week beginning 8th July.  Nothing arrived and since then another letter asking for an explanation arrived, I wrote explaining again only to be told that the explanation isn't acceptable.  I can't check the online statement as no records are showing for that particular year.  

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By magocks
16th Sep 2013 13:20

Difficult HMRC

Sorry.......I should have said that the client has since ceased in business and therefore cannot rectify the situation in the next P35.

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By bumpdinkwhallop
16th Sep 2013 13:28

we had a very similar situation. The problem had arisen as the client had fallen behind with her PAYE/NIC due liabilities. A payment plan was arranged with the revenue to cover all outstanding liabilities. However a month after the payment plan was set up the P35 had to be amended which resulted in actual PAYE/NIC liability being less than the payment plan amount set up. Hence the over payment. HMRC are only looking for an explanation of the overpayment whcih unfortuantly you will need to provide if you wish the overpayment returned.

 

My advice would be to get the bank statements and CHQ stubs out, get a breakdown of the 12 monthly P32s or if quarterly the totals per quarter and try to establish where the overpayment came from. Also get online and activate your tax dashboard as this will detail the payments allocated to the different tax years by the revenue.

Also think about getting your payroll outsourced and if your worried about being unable to handle any type of revenue investigation fee protection insurance is well worthwhile if its keenly priced.

 

good luck

 

 

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By Ron Enticott
16th Sep 2013 14:59

PAYE overpayments

I too have a client who has ceased trading and has been advised by HMRC that they have apparently overpaid, some £2000PAYE and NI but they need to provide a full explanation as to why they overpaid otherwise they will not get a refund. This is not easy as payments have been misallocated by HMRC in the past and payments remitted online to CT rather than PAYE. I have requested a breakdown of the figures that HMRC have of the individual payments but they refuse to give this. If they do not provide a make-up of the total paid how can an employer check that all the payments have been included or whether HMRC have wrongly included a payment which should have been allocated elsewhere? can someone advise on the legalities of both refusing to give a breakdown of their figures and refusal to refund? Ron Enticott.

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By MzEden
16th Sep 2013 16:22

Just posted this on a CIS question but relevant here too.

We had our anti - money laundering training the other day, I have to admit that I tuned some of it out but I'm pretty sure of the following:

That anyone who kept money that they knew they were not entitled to was committing theft. (an acquisitive crime)

Any person who commits an acquisitive crime (i.e. one from which he obtains some benefit in the form of money or an asset of any description) in the UK will inevitably also commit a money laundering offence under UK legislation.

So, I pay Blogs & Sons & Co Ltd (who hopefully don't actually exist) twice by accident. One of us informs the other that it appears too much money has been paid and a refund is due but then Blogs & Sons & Co decides that the reason I have given for overpaying is 'not acceptable' and refuses to repay unless I can give, what they deem to be a suitable reason.

This is classed as theft as Blogs & Sons & Co are benefitting from having my money that they are holding and know they are not entitled to.

Sound familiar?

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By Jon Darlington
16th Sep 2013 16:27

HMRC Charter

HMRC are committed under Article 3 of their Charter treat taxpayers as honest.

"Unless we have a good reason not to, we will:

- presume you are telling us the truth

- only question what you tell us if we have good reason to."By refusing to repay an overpaid  PAYE balance, they are in clear breach of this commitment. It is they who are obliged to give a good reason why they are not paying back the amount. It is not sufficient to use a general principle that "people don't pay more than they have to". It is this sort of abuse of power that should be stamped on. Perhaps the complaints process might help if it is followed through correctly and persistently.      

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