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HMRC internal manual

Enquiry Manual

Concluding an Enquiry: SA Legislation: Examples of the Amount of Tax on SA Closure Notices

Example 1

Victoria is self employed. Her self assessment shows tax due for the year (Box 18.3 in her return) of £3,000. An enquiry shows that the correct figure should have been £5,500 (made up of income tax, £5,000, and Class 4 NIC, £500).

The amendment in the final closure notice will show the original self assessment of £3,000, the additional tax of £2,500 and the total amended self assessment of £5,500; i.e. the total amount of tax which should be included in the self assessment for the year.

Example 2

If in example 1 a jeopardy amendment to Victoria’s self assessment was made bringing her self assessment to £5,000, the additional tax brought into charge is £2,000.

The amendment in the final closure notice will show the amended self assessment of £5,000, the additional tax of £500 and the total amended self assessment remains £5,500. The earlier jeopardy amendment makes no difference to the amount of tax which should be included in the self assessment for the year.

Example 3

Emma is an employee. All her earnings are subject to PAYE deduction. Her return shows an overpayment of £2,000, ie the figure in box 18.3 was (£2,000). The return shows a substantial claim for ITEPA2003/S336 expenses in box 1.32. The case is taken up for enquiry and it is established that no repayment arises.

The amendment in the final closure notice will show the original self assessment of a £2,000 repayment, the additional tax of £2,000 and the total amended self assessment of £nil; ie the total amount of tax which should be included in the self assessment for the year.

Whether or not a repayment has been made prior to the opening of the enquiry will not affect the amendment figure to be included in the final closure notice. You can enter the overall payment or repayment position, on the date you close the enquiry, into your final closure notice.

Example 4

Geri’s self assessment shows a repayment due of £1,500; ie the figure in box 18.3 is (£1,500). An enquiry shows that the self assessment should show only £1,000 overpaid.

The amendment in the final closure notice will show the original self assessment of a £1,500 repayment, the additional tax of £500 and the total amended self assessment of £1,000 repayment. Any over-repayment already made will be resolved in the taxpayer statement.

Example 5

Bill has been involved in a PAYE avoidance scheme. His original return for the year ending 5 April 2017 showed he was due to pay £5,000.

Bill omitted a lump sum payment of £10,000, with IT due of £2,000. A partial closure notice was issued in 2018 in relation to this specific matter.

In 2019 the enquiry into the avoidance issue is completed with a further £10,000 of income tax due. The correct amount of tax due for the year should have therefore been £17,000.

The amendment in the final closure notice will show the amended self-assessment of £7,000 (the original self-assessment of £5,000 and the Partial closure notice amendment of £2,000), the additional tax of £10,000 and the total amended self-assessment is £17,000. The earlier amendment makes no difference to the amount of tax, which should have been included in the original self-assessment.

Example 6 – partial closure notice

As in Example 1, Victoria is self-employed. Her self-assessment shows tax due for the year (Box 18.3 in her return) of £3,000. An enquiry shows that the correct figure should have been £5,500 (made up of income tax, £5,000, and Class 4 NIC, £500).

Victoria is also an employee and her PAYE income is the subject of an avoidance scheme enquiry. As enquiries are still on-going into the scheme, the partial closure notice reflects the closure of the matters relating to her self-employment only.

The amendment in the partial closure notice will show the original self-assessment of £3,000, the additional tax of £2,500 and the total amended self-assessment of £5,500; i.e. the total amount of tax which should be included in the self-assessment for the year after making the amendments relating to the matters to which the partial notice relates.

Your partial closure notice should state that the notice does not constitute a final settlement. However, the additional tax due as a result of the amendment is due and payable within 30 days of the issue of the partial notice.