The efficiency of DEFRA is questionable and overpaid subsidies have presented a significant problem to a number of our farming clients in recent years.
There is always the basic problem of working out what is overpaid and just a mistake, but the accounting treatment of subsidies is crucial to the tax bill. Where you believe that you are in receipt of subsidy in excess of that claim THIS SHOULD NOT BE INCLUDED in the income in the year in question, but treated as a creditor in the accounts.
If the excess subsidy is included in income in the accounts you will not only be suffering extra tax that tax year, but it will impact on your tax payment on account for the next year.
If this accounting treatment has not been followed you should bear in mind that your tax return can always be amended within 12 months of the filing date. So if the subsidy you have had to pay back is significant it may be worthwhile your accountant revisiting your return, as this can have an immediate cash flow advantage to you.