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HMRC internal manual

Self Assessment Manual

Records: maintain taxpayer record: liability unlikely

Some taxpayers will be within SA simply because they have income from a certain source. For example, Rent a Room.

In some cases that source may show a loss year after year, and the taxpayer will advise that profits are unlikely for the foreseeable future. Rather than issue an SA return every year, it will suffice to issue a return periodically to check the position.

In this circumstance, on receipt of a return the taxpayer may question the need to complete it. You should advise him or her that the return should be completed and filed. On receipt, you will consider whether a return is required in future years, and if so, how often.

Upto October 2015, the LU YEAR signal could be set on a Partnership and Individual SA record to inhibit issue of a return for a period up to 3 years but the signal was removed from such cases at that time and from that date can only be set on Trust cases where it can be set for a period of up to 5 years. A return will be issued automatically for the year following that entered in the LU YEAR field.

After the record has been selected by the automatic selection process for bulk issue of returns, the computer will extend the LU YEAR period by five years.

When the return is captured, if it shows liability to tax and / or Class 4 NIC a work item is created on the ‘Returns Review’ Work List as LIABILITY UNLIKELY. Detailed advice is available in the ‘Returns’ business area, section ‘Returns Work Lists’.

If you decide that the position need be checked only periodically

  • Decide for how many years you want to inhibit return issue
  • Use function AMEND TAXPAYER SIGNALS to set the LU YEAR signal for the required period
  • Write to the taxpayer advising him or her when you next propose issuing a return to review the position. Ask that any change of circumstances in the intervening period be notified to you