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PAYE47111 | Employer returns: employer return - overpayments: reconstructed employer returns (Action Guide)

From HM Revenue & Customs · PAYE Manual

When the Debt Management Office send you a return marked ‘Reconstruction’ and an overpayment arises follow steps 1 - 15 below. The Guide is presented as follows

Step 1

Steps 2 - 3

Steps 4 - 7

Steps 8 - 9

Steps 10 - 13

Step 14

Step 15

For details of how to access any of the Employer Business Service functions, use PAYE057.

Initial action

1. Your initial action will depend on the tax year to which the return relates:

  • If the return is for a tax year up to 2004 go to step 2

  • If the return is for a tax year from 2005 onwards go to step 4

Return relates to a tax year up to 2004

2. Use Function CAPTURE EOY RETURN DETAILS to capture the reconstructed return as a Pro-Forma

3. Use Function VIEW EMPLOYER INDICATORS to check whether the RECONSTRUCT year-related indicator has already been set on the employer record

  • If the indicator has not been set then use Function AMEND EMPLOYER INDICATORS to set it - go to step 8

Return relates to a tax year from 2005 onwards

4. Use Function RECORD RETURN RECEIPT DETAILS to record the receipt of the reconstructed pro-forma return making sure that you select the appropriate submission type:

  • Pro-forma Complete Return

  • Pro-forma Part P35

  • Pro-forma Part P14

  • Pro-forma CIS36

5. Use Function CAPTURE EOY RETURN DETAILS to capture the reconstructed return as a pro-form ensuring that you check the Pro-forma check box

6. Use Function VIEW EMPLOYER INDICATORS to check whether the RECONSTRUCT year-related indicator has already been set on the employer record

  • If the indicator has not been set then use Function AMEND EMPLOYER INDICATORS to set it

7. BF your papers until

  • The return has been released from ERIC
    And

  • The captured return displays a Return Status Indicator (RSI) of either RSI 2 or RSI 3 in the View EOY Returns History screen. Take a print of the screen to confirm the RSI Status

P565 completion

8. Complete a form P565 Request Stencil (Word 43KB) for referral to the authorising officer (Word 27KB) advising that the overpayment arising is to be treated as a Permanent Overpayment

When completing the P565 Request Stencil you must:

  • Complete the whole of the left hand side of the form

  • Enter in the ‘Report of Overpayment’ box on the form P565 Request Stencil ‘Pro-forma return reconstructed by the Debt Management Office - treat overpayment as a Permanent Overpayment’

  • Tick the ‘Treat as permanent overpayment’ box on the right hand side of the form. Leave all other sections blank

  • Sign and date the P565 Request Stencil

9. Pass the completed form P565 Request Stencil to your authorising officer together with the following

Where the return is for a year from 2005 onwards

  • A screen print of the View EOY Returns History Screen confirming the return Status Indicator of either RSI 2 or RSI 3

For all returns

  • A screen print of BROCS EMPLOYER DATA SUMMARY (Format 2)

  • All other evidence to substantiate the overpayment

  • Any supporting information from the employer record pad

  • Unless an employer has an XP scheme type prepare a minute for issue to the appropriate PAYE section advising them that

  • The employer return has been reconstructed by the Debt Management Office

  • More tax has been paid than the amount shown on the P35 but no record is held
    And

  • Request a report if it is discovered at a later date that any employee’s PAYE tax is not fully shown on the form P35

Authorising the form P565

10. On receipt of the Form P565 Request Stencil and supporting evidence from the officer investigating the overpayment you must review all the evidence supplied to satisfy yourself that the full amount of the overpayment has been substantiated and is correct

  • If you are satisfied that the overpayment is correct go to step 11
    Otherwise

  • If you believe that the apparent overpayment has not been substantiated satisfactorily return the papers to the relevant officer requesting that they supply a full explanation of any discrepancies and where applicable rework the case

11. Complete the next available form P565 (PDF 26KB) in your form P565 pad with details of the overpayment and disposal instructions. Crossing out, overwriting, use of tippex or corrections of any kind are not acceptable on a form P565:

  • If a mistake is made whilst completing a form P565 go to step 14
    When completing the form P565 you must

  • Ensure that the notes in the ‘Report of Overpayment’ box on the P565 Request Stencil are transferred to the ‘Special circumstances’ box on the form P565

  • Authorise the form P565 by completing the ‘Authorising Officer’s’ signature box on the form P565

  • Detach all 3 copies of the P565 from the P565 pad for referral to the Repayment Security Officer (RSO)

12. Refer the following to the RSO:

  • All 3 copies of the completed form P565

  • The P565 Request Stencil

  • All supporting evidence and documentation

  • Any supporting information from the employer record pad

13. Issue the minute prepared by the officer investigating the overpayment (see step 9) to the appropriate PAYE Section

Mistakes made whilst completing Form P565

14. If you make a mistake whilst completing a form P565 you must cancel the form P565 as follows:

  • You must ensure that you have all 3 copies of the form P565

  • Place each copy of the form P565 on top of each other in their correct order (This will ensure that whatever is written on the top copy of the form P565 is copied through to the other 2 copies)

  • Rule 2 lines diagonally across the whole of the form and write in between the lines ‘cancelled’

  • Initial and date the form P565

  • Staple all 3 copies of the form P565 together and refer them to the RSO

Action to be taken by the RSO on receipt of the forms P565

15. On receipt of the forms P565 and all the relevant documentation from the authorising officer, the RSO must:

  • Complete the ‘Repayment Security Officer’s signature box on the form P565 in order to confirm that the form P565 has been despatched via the RSO

  • Despatch the form P565 (Part 1) to Banking Operations in a sealed envelope. (This must be done on a daily basis)

  • File the form P565 (Part 3) in their Form P565 Security File

  • File the form P565 (Part 2) and all associated documentation in the employer record pad

Note: Where the employer record pads are held remotely to the RSO, the RSO must follow their existing procedures to ensure that the copy P565 and all associated documentation are filed in the employer record pad.