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HMRC internal manual

Debt Management and Banking Manual

Pre-enforcement: consider the defaulter: deceased customers: action to take on notification of death

In all cases where you are advised that a debtor has died:

  • note the information such as the date of death and personal representatives on the relevant computer systems (this should prevent repetition and further potentially distressing contact)
  • advise relevant parties immediately (Field Force collector/court manager as appropriate) that the debtor has died.

Partnership debts where there is an upstanding partner

Usually in general partnership cases or joint household overpayments, you can take enforcement action against the upstanding partner for the debts for which they were jointly (and severally in tax credit cases) liable.

Tax credits overpayments: joint household breakdown

If the date of death is after the date the couple split up, any overpayment is apportioned 50/50.

If details of the personal representative(s) are known, write to them (that is make a claim in the estate for the deceased claimant’s 50 per cent share of the overpayment), and in all cases:

  • remit the deceased claimant’s 50 per cent share of the overpayment Type 5B (because the NTC system does not allow you to partially remit an amount Type 2)
  • continue any TTP arrangement or collection action against the upstanding ex-partner for their share of the overpayment.

All other partnership / joint household overpayment cases

Usually when a partner dies their share of the partnership assets goes to the upstanding (remaining) partner and does not form part of their estate, unless there is a partnership agreement stating otherwise. If there is an upstanding partner he is pursued for the partnership debts.

In all cases continue enforcement action for the full debt against the upstanding partner. Action must be reasonable and proportionate in the circumstances and, if you are aware there was an agreement passing the deceased partner’s assets into their estate, write for payment to the personal representatives (make a claim in the estate).

If you receive a request for time to pay or a claim of hardship, consider the case sympathetically because the upstanding partner will be affected by the loss, particularly if the deceased was the main breadwinner, or if the deceased held a position of authority within the business.

If the upstanding partner has no assets and enforcement action is not appropriate but you know the deceased partner had an estate, you may consider a claim in the estate is appropriate, although partnership creditors are not paid until after the deceased’s personal creditors are paid. If you consider a claim is appropriate:

  • make a claim in the estate by writing to the personal representative for payment
  • remit the debt/overpayment Type 2.

Sole debts and partnership debts / joint household overpayments where there is no upstanding partner

  • Set the deceased signal (if not already set) / note relevant information on:

    • IDMS using Maintain Designatory Details
    • SA using Amend Designatory Details in TBS and set the PCA signal (for more information see SAM: Special Cases-Permanent Cessation-Deceased Cases.)
    • PAYE using BROCS function AMEND TAXPAYER DATA format 1 (ATD, NA)
    • Class 2 NIC by sending form NICO/100A to Self Employment Services (SES), who will put the date of death on NIRS2.
    • Tax credits by advising TCO to set the deceased signal on Frameworks.
    • VAT by Grimsby VAT Registration Unit (VRU) who will set a UI User Interest on Electronic Folder (EF)
    • Indirect taxes by noting relevant information in EF.
  • Take further action as below depending on the circumstances of the case.

Enforcement proceedings not started

Where enforcement proceedings have not started:

  • in a VAT case, Grimsby VRU will:

    • issue the relevant VAT forms
    • establish the debt
  • in all cases, then transfer the case to the Estates & Trusts Office OU 303600.

Enforcement cases

If enforcement proceedings have started, take the following action:

CCP cases 

Distraint or Taking Control of Goods (TCoG) cases

  • Stop all enforcement action.
  • Notify the field force collector/auctioneer as appropriate.
  • Transfer the case to the Estates & Trusts Office in Nottingham OU 303600.