How to avoid unnecessary delays in claiming Self-Assessment repayments

The procedural steps for claiming repayments depend on whether a tax return is submitting using third party software or via HMRC’s own online filing service. The following guidance is intended for professional agents using bespoke tax return software only.

If you’re short of time you can jump straight to our key piece of advice, but otherwise let’s start by explaining how the HMRC repayment process should work for refunds claimed via a Self-Assessment tax return.

Which refunds does this article relate to?

We are focussing here on repayments claimed via SA100 Tax Returns, rather than R40 repayment claims or overpayment relief claims.

We are concentrating on repayments instigated by submitting a tax return because the vast majority of these are filed and processed electronically, with no human intervention required once the return has been submitted. Where a repayment is due, in theory this automated process should result in a prompt turnaround time, with the repayment issued to the taxpayer without undue delay – HMRC advise within 10 working days.

By contrast, R40 repayment claims and overpayment relief claims have to be filed on paper, meaning they require manual processing and data entry by HMRC and can be subject to postal delays. These factors will inevitably slow down the process overall compared with a tax return filed online.

How do HMRC process tax return repayments?

According to HMRC, approximately 88% of repayments claimed via tax returns submitted in respect of the 2021/22 tax year were processed automatically.

Repayments should be issued via bank transfer or payable order (cheque) as requested on the tax return. If HMRC hold debit card details for a taxpayer, the repayment will be made back to that same card (regardless of the repayment method specified on the tax return) if the most recent payment the taxpayer made to HMRC was:

• within the previous nine months;
• paid from that card; and
• more than or equal to the amount now repayable.

In some cases, tax returns within the automated process will be flagged for review by a compliance team – for instance if an error is suspected in the tax return. If HMRC’s compliance teams agree there is an error or other issue to investigate, a correction to the return by HMRC may be issued, or a compliance check initiated. In these situations, the repayment falls out of the automated process and the taxpayer’s online HMRC account will show a credit balance only, with no repayment pending.

If no risk is flagged by the automated system, or once HMRC staff have reviewed the possible issue and are satisfied there is no undue risk with the repayment, the automated process continues and the online account should show a “repayment pending”. That repayment should be issued within 10 working days, as above.

If a taxpayer has made a recent payment to HMRC, for reasons of fraud prevention, no repayment will be issued until 14 days have passed from the date of that payment.

Why does the automated process go wrong?

From our discussions with HMRC, the key message is not to submit a tax return which shows a repayment due unless a Notice to File (SA316) has been issued in respect of that taxpayer. Returns submitted in the absence of a Notice to File are referred to as voluntary returns.

Voluntary returns are the most common contributor to repayment delays, and have increased the number of failures in the automated repayment process by 75% since HMRC altered their processes in September 2021 to address the security risk these returns can present.

The recommended practice to ensure a prompt repayment is therefore to request a tax return from HMRC and wait for the Notice to File to be issued before you submit the return. This can be done either be phoning HMRC to ask for a tax return to be issued, or by submitting a new Self-Assessment registration.

Can anything else cause repayment delays?

Voluntary returns are just one of a number of possible reasons which result in repayments claimed via tax returns dropping out of the automated process. The full list of reasons is contained in HMRC’s manuals SAM113010 and includes the following:

• The taxpayer has an instalment plan in place with HMRC, particularly one using Direct Debit.
• The taxpayer’s address on the return differs to HMRC’s records.
• The taxpayer is insolvent, or has previously been bankrupt and the pre-bankruptcy UTR has been used.
• An “informal standover” is in place – ie a manual intervention has been made to offset a payment against another liability on the taxpayer’s record.
• The repayment balance is made up of more than 150 payments made to HMRC.
• The repayment amount is too high (£150,000 for payable orders, £90m for bank transfer).

In these situations, a credit balance will be shown on the account but the repayment will not be issued without manual intervention. HMRC call handlers will sometimes refer to a ‘marker’ being on the taxpayer’s account, which is visible to HMRC but not to the taxpayer or their agent. It is unlikely that either the agent or their client will be told the repayment is being held, and requests for the repayment to be issued via the agent’s online account are unlikely to be successful. The agent will therefore need to speak to HMRC to identify and resolve the problem in order for the repayment to be issued.

What should we do?

For repayment claims you have not yet made, the key piece of advice is to avoid submitting voluntary returns. Agents should request a notice to file from HMRC first, as above. 

The second important aspect is to complete the bank details on page TR6 of the tax return. This should result in the repayment being received faster than by payable order.

For repayment claims which have already submitted but not processed, and which have not been issued within the expected 10 working days, it may be worth reviewing the 18 situations contained in SAM113010 which result in the automated process failing. If you check that list before contacting HMRC and consider whether any of the factors could explain the delay it should help you resolve the situation with HMRC and get the repayment issued as quickly as possible.

We have also received a number of complaints from members about delays obtaining refunds when the taxpayer is deceased. We understand from HMRC’s bereavement teams that a common problem is that HMRC do not hold details of the personal representatives (PRs), so they don’t know who to make the repayment to.

HMRC may be informed of the PRs early on in the process of reporting a death via the ‘Tell us Once’ service, or later on by letter or phone. It is recommended to tell HMRC who the PRs are before filing any returns showing a refund. HMRC have asked that agents allow a period of eight weeks for processing following the submission of a return for a deceased case, and that any chasing calls thereafter should be made to the bereavement helpline on 0300 2003300.  When calling, it is worth checking if HMRC have the PRs details on their files in case this is holding up the repayment.