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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Payments: payments overview: receive request for statutory instalment arrangement

A taxpayer has the statutory right to pay certain SA liabilities by instalments. These arrangements are referred to as Statutory Instalment Arrangements (SIA).

In an SIA case, the taxpayer applies to exercise an option to pay by statutory instalments. Requests to pay under an SIA must first be approved by the office with SA Technical Responsibility. Arrangements for collecting payment by statutory instalments are handled by the office responsible for processing.

The number of instalments payable varies depending on the type of SIA. With the exception of Section 281 TCGA 1992 cases, where the original Relevant Due Date (RDD) is retained, the Statutory Due Date of the instalment becomes the RDD.

The separate instalments are set up using function CREATE SUNDRY CHARGE and the original charge is reduced by an equivalent amount using function CREATE RETURN CHARGE. In the case of Section 281 TCGA 1992 cases function AMEND RELEVANT DATES is used to change the RDD of each instalment to the RDD of the original charge.

Details of the SIA are entered on the taxpayer record using SA functions AMEND TAXPAYER SIGNALS and MAINTAIN SA NOTES. Select from the SEES Notes Paster, Statutory Instalment section ‘Statutory instalment granted…’ and complete the appropriate details using the drop down boxes.

The first application for payment is by letter and is accompanied by a manually completed payslip. Subsequent reminders and applications are by way of a taxpayer statement. The statement includes details of any interest on late payment including the amount of interest accrued in Section 281 TCGA 1992 SIA cases.

Statutory instalment cases are to be reviewed shortly after each instalment due date to ensure payments are received and allocated correctly.

If exceptionally the amount due is amended the instalments must similarly be amended to reflect the new liability. Where an instalment (including any interest) has not been paid the normal course of action is taken to recover the unpaid amount.

The SA liabilities that qualify for SIA status are

 

Certain Schedule E (S137 ICTA 1988)

A taxpayer can elect to pay a Group N net underpayment, (where a share option has been exercised), by instalments in accordance with Section 137 ICTA 1988. Arrangements for collecting payment by statutory instalments are handled by the office with processing responsibility.

When a written request to pay by statutory instalments is received, the office with technical responsibility is asked to

  • Confirm the Statutory instalment provisions apply, and
  • State the relevant year of the underpayment

If a statutory instalment arrangement is appropriate, payment is made in 5 instalments. The statutory due date for each instalment is determined as follows

Instalment Statutory Due Date (SDD)
   
1st instalment 14 days after issue of the first application or the balancing payment due date whichever is later
5th instalment 5 April of the fifth year after the end of the relevant year
2nd, 3rd and 4th instalments At equal intervals between the SDD of the 1st and 5th instalments

The SDD of each instalment payable in accordance with Section 137 ICTA 1988 is also the Relevant Due Date.

Capital Gains Tax (S280 TCGA 1992)

A taxpayer can apply in writing to pay Capital Gains Tax by instalments in accordance with Section 280 TCGA 1992 (see Capital Gains Manual). Arrangements for payment by statutory instalments are allowed where the amount on which the tax is assessed is received in instalments.

Arrangements for collecting payment by statutory instalments are handled by the office with processing responsibility. When a request to pay by statutory instalments is received, the office with technical responsibility is asked to

  • Confirm that the statutory instalment provisions apply, and
  • Say what payments are expected and the statutory due dates

If a statutory instalment arrangement is appropriate, payment may extend to the date the taxpayer receives payment of the last instalment of the amount on which the tax is assessed. However the last payment cannot be any more than 8 years from the original due date. Up to 8 yearly or 16 half-yearly instalments can be accepted.

The Statutory due date of each instalment payable in accordance with Section 280 TCGA 1992, is also the Relevant Due Date from which interest would accrue if the payments were made late.

Capital Gains Tax (S281 TCGA 1992)

A taxpayer can apply in writing to pay Capital Gains Tax, on certain disposals made after 13 March 1989, by instalments in accordance with Section 281 TCGA 1992. Arrangements for collecting payment by statutory instalments are handled by the office with processing responsibility.

When a request to pay by statutory instalments is received, the office with technical responsibility is asked to confirm the

  • Statutory instalment provisions apply
  • Amount of tax chargeable on the gains, and
  • Date of the first payment

If a statutory instalment arrangement is appropriate payment is due in 10 equal yearly instalments. The first payment is payable on the date the balancing charge would have been due if there had been no instalment arrangement.

The Relevant Due Date (RDD) of the tax, the date from which interest accrues, does not change. The original RDD of the balancing charge applies to each instalment payable in accordance with Section 281 TCGA 1992.

Example

2009-2010 balancing charge £10,000 capital gains tax liability due on 31/01/2011.

The Technical office confirms that S281 applies to the £10,000 and first payment due under the statutory instalment arrangement will be on 31/01/2011.

Statutory instalment arrangement set up as follows

Amount Statutory due date Relevant due date
     
£1.000 31/01/2011 31/01/2011
£1.000 31/01/2012 31/01/2011
£1.000 31/01/2013 31/01/2011
£1.000 31/01/2014 31/01/2011
£1.000 31/01/2015 31/01/2011
£1.000 31/01/2016 31/01/2011
£1.000 31/01/2017 31/01/2011
£1.000 31/01/2018 31/01/2011
£1.000 31/01/2019 31/01/2011
£1.000 31/01/2020 31/01/2011

S299 ITTOIA 2005

A taxpayer can apply in writing to pay Capital Gains Tax by instalments in accordance with S299 ITTOIA 2005. Arrangements for payment by statutory instalments are allowed where the

  • Amount on which the tax is assessed is received in instalments, and
  • Taxpayer can demonstrate that payment in one sum would cause hardship

Arrangements for collecting payment by statutory instalments are handled by the office with processing responsibility. When a request to pay by statutory instalments is received, the office with technical responsibility is

  • Asked to confirm that the statutory instalment provisions apply, and
  • Say what payments are expected and the statutory due dates

If a statutory instalment arrangement is appropriate, payment may extend to the date the taxpayer receives payment of the last instalment of the amount on which the tax is assessed. However the last payment cannot be any more than 8 years from the original due date. Up to 8 yearly or 16 half-yearly instalments can be accepted.

The Statutory due date of each instalment payable in accordance with Section 34(8) ICTA 1988 is also the Relevant Due Date.