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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
Updated
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Records: set up taxpayer record: PAYE cases that potentially need to be brought into SA

When the National Insurance and PAYE Service (NPS) carries out end of year reconciliation, where certain conditions are met and the SA indicator is not set, work item 117 (Potential SA case) is created. Guidance on how to deal with work item 117 can be found at WMI117.

From April 2014, where there is a UTR on the NPS record, the system will attempt to reactivate a dormant SA record from NPS Work Management item 117. From October 2014, where there is no UTR on the NPS record, the system will attempt to create an SA record from WMI117.

When NPS carries out a tax coding calculation, where certain conditions are met and the SA indicator is not set, work item 217 (Potential SA case) is created. Guidance on how to deal with work item 217 can be found in the Action Guide (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

From October 2013, where there is a UTR on the NPS record, the system will attempt to reactivate a dormant SA record. From October 2014, where there is no UTR on the NPS record, the system will attempt to create an SA record from WMI217.

If you identify during day-to-day working a PAYE individual who fulfils SA criteria (SAM100050), the individual can be set up in SA and does not have to complete form SA1.

If the individual is in receipt of self employed income, you should

  • Manually prepare a form CWF1 / SA400 / SA401 / SA402 (depending on if self employed or a partnership or partner) from the information held
  • Clearly note the form ‘Constructed CWF1 / SA400 / SA401 / SA402 from information discovered during a review’
  • Prepare a letter, addressed to the Central Agent Authorisation Team (CAAT) Longbenton on the following lines

‘Please find attached a constructed CWF1 / SA400 / SA401 / SA402 from the information discovered during a work item 117 review/day to day work. The customer commenced self employment and I have set the case up in SA. Please arrange to deal with the Class 2 NICs issues.’

  • Send the manually prepared form CWF1 / SA400 / SA401 / SA402 and letter to CAAT
  • Set the case up in SA

If the individual has failed to inform us of the self employment within 6 months after the end of the tax year in which the period of self employment commenced, you should additionally refer the case to the Hidden Economy Risk Team (HERT) as a Failure to Notify case.

Note: Before setting up a new SA record, always check that a dormant SA record does not exist and that all relevant years are reconciled on NPS.

There are also cases where an underpayment has arisen on PAYE and cannot be collected in the code, either because the time limits for collection will not allow collection using the code or because the amount involved exceeds the limit of £3000. In these cases an SA record is created, or a dormant record is reactivated, in order to issue a return for the relevant years(s) in which the underpayment(s) arise.

Where the usual SA criteria is not present and the record is to be made dormant after the relevant returns have been issued, you should refer to the Action Guide (This content has been withheld because of exemptions in the Freedom of Information Act 2000) (available to internal users only) for action to take in respect of the SA Start year, and note that this action must be taken before setting the Final Return Year signal.