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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
, see all updates

Returns: individuals returns: bankruptcy cases (Action Guide)

Follow steps 1 - 12 below where

  • The return is for the year that an approved Individual Voluntary Arrangement (VA) or Bankruptcy (BY) (Scotland Award of Sequestration) Order was made

And 

  • The taxpayer ceased in employment or to trade during the year of VA/BY but commenced a new employment / trade prior to 5 April following the Relevant Date

Follow steps 13 - 14 below to ensure payments on account are created on the new record in cases where the taxpayer continues in employment or to trade in the same employment / trade post 6 April following the Relevant Date.

Note: The Insolvency Claims Handling Unit (ICHU) deals with claims in bankruptcies. When issuing a claim, ICHU remits all debts on the main computer systems and manual systems (such as the Miscellaneous Charges Unit), after which these records may not show the correct outstanding unpaid liabilities. If approached by a taxpayer, their representative, or Official Receiver / trustee for details of debt in a bankruptcy case, please refer the enquirer to ICHU. Do not provide any information as it may be incorrect and misleading. 

For details of how to access the SA functions, select ‘Index of Functions’ on the left of the screen.

This guide is presented as follows

  Steps 1 - 2
   
  Steps 3 - 5
  Steps 6 - 12
  Steps 13 - 14

All cases

1. Use function VIEW TAXPAYER DESIGNATORY DETAILS to obtain the Relevant Date and to ensure that the Last SA Return Required For Year Ending 5th April signal is set on the old record to the year of the return
   
2. Calculate the liability of the taxpayer for the periods to and from the Relevant Date by apportioning the income, allowances and reliefs. Make a note of any in-year repayment(s) made to enable you to enter the amount in the Tax already refunded field in function CREATE RETURN CHARGE for the appropriate period

Period prior to the Relevant Date

3. Prepare a manual Tax Calculation for the period 6 April to the Relevant Date for issue in a Revenue Calculation case or where you have repaired a Self Calculating taxpayer’s return
   
4. Use function CREATE RETURN CHARGE to enter the liability for the period 6 April to the Relevant Date on to the taxpayer’s old record
5. Issue the Tax Calculation to the person set up to act in a capacity for the taxpayer

Period from the Relevant Date

| 6. | Prepare a manual Tax Calculation for the period from the Relevant Date to the 5 April for issue in a Revenue Calculation case or where you have repaired a Self Calculating taxpayer’s return | || | 7. | Use function CREATE RETURN CHARGE to enter the liability for the period from the Relevant Date to 5 April on to the taxpayer’s new SA record. To do this
  | |   | ### Where more than 80 per cent of the total liability for the return year is satisfied by tax deducted at source | |   | * Enter the whole amount of the liability for the period from the Relevant Date in the Underpayments for earlier years field | |   | * Enter 0 (zero) in all the other amount fields with one exception. Where an in-year repayment has been made for the period from the Relevant Date, enter the amount of that repayment in the Tax already refunded field | |   | ### In all other cases | |   | * Increase the entry in the Income tax due after reliefs field by the appropriate amount of the pre-Relevant Date liability (SAM121272)
 
And  | |   | * Increase the entry in the Overpayments for earlier years field by the appropriate amount of the pre Relevant Date liability | |   | ### Where exceptionally, the appropriate amount of the pre Relevant Date liability is negative | |   | * Treat the amount as positive and increase the entry in the Tax deducted at source field in function CREATE RETURN CHARGE by the amount
 
And  | |   | * Treat the amount as positive and increase the entry in the Underpayments for earlier years field in function CREATE RETURN CHARGE by the amount | | 8. | Issue the Tax Calculation to the taxpayer together with a copy to the agent where form 64-8 is held | | 9. | Check that any underpayments or potential underpayments that arose pre bankruptcy have been taken out of the coding for post bankruptcy years. | | 10. | Use function AMEND TAXPAYER SIGNALS to unset the Manual Return signal | | 11. | Update the taxpayer’s return profile on the new record with details of the supplementary pages the taxpayer has returned using function MAINTAIN RETURN PROFILE | | 12. | Check the return along with the taxpayer’s new record for any of the following 5 situations. Where the taxpayer has made a claim to reduce payments on account see section ‘Claim to adjust payments on account’ (SAM1000 onwards) | |   | * Select ‘Action 1’ and so on, in the right hand column to find out the actions you need to take in each situation |

 

Situation Action
   
LU (Liability Unlikely) set on the record and the return shows Tax and /.or Class 4 NIC liability (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Date of cessation of a business shown on the return (Box 7 on the Self-employment (full) page SEF 1 or box 6 on the Self-employment (short) page SES 1, Box 3.3 for Short Tax Return (SA200)) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Date taxpayer ceased to be a partner in a business shown on the return (Box 4 on the Partnership (full) page PF 1 and on the Partnership (short) page PS 1) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Taxpayer wants to transfer surplus allowances to the spouse or civil partner (box 15 of the Tax reliefs section of the return page TR 4, and box 11 of the Age related married couple’s allowance section of the Additional information page Ai 3) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
An underpayment of less than £3000.00 arises and the taxpayer has not ticked the box on the return to show that the underpayment is not to be coded (SA100 box 2 in the Finishing your Tax Return section page TR 6, SA200 box 12.8) (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

 

Creating payments on account where the taxpayer continues in employment or to trade in the same employment / trade post 6 April following the Relevant Date

|   | Following capture of the return on the old record using function CAPTURE RETURN for the year of VA or BY | || | 13. | Calculate the payments on account due for the following year on the new record | | 14. | Use function CREATE RETURN CHARGE on the new record for the VA or BY year to enter | |   | * The calculated amount in the Income tax due after reliefs field
 
And | |   | * The calculated amount in the Overpayments for earlier years field |