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HMRC internal manual

Self Assessment Manual

Payments: payments overview: capital gains tax: S281 TCGA 1992 (Action Guide)

When you receive an enquiry in the processing office for a statutory instalment arrangement (SIA) in accordance with Capital Gains Tax (S281 TCGA 1992) follow steps 1 - 10 below.

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

1.  If the request is not in writing, advise the taxpayer to submit a written request for payment by statutory instalments to the office with SA technical responsibility

2.  Refer any written application for an SIA to the office with SA technical responsibility. Ask the office with SA technical responsibility to confirm this is an SIA case and tell you the amount of tax chargeable on the gains and the statutory due date of the first payment (normally 31 January following the year of the related SA Return)

3.  If the office with SA technical responsibility tells you an SIA is not appropriate write and advise the taxpayer that the instalment provisions do not apply, ask for payment in full and remind the taxpayer about interest

4.  Where the office with SA technical responsibility approves the arrangement they will provide the amount of tax chargeable on the gains and the date the first payment is due.

You should establish the amount of each instalment and the due dates for payment (step 5) and set up the arrangement on the taxpayer record (step 6)

5.  Under S281 TCGA 1992 payment is due in 10 equal yearly instalments. Use the amount and due date of first payment notified in the memo from the office with SA technical responsibility to establish the due dates of the remaining 9 instalments

6.  To set up details of the SIA arrangement on the taxpayer’s SA record

  • Use function CREATE RETURN CHARGE and reduce the amount in the Capital Gains Tax field by the amount included in the SIA
  • Use function CREATE SUNDRY CHARGE to set up a separate charge on the taxpayer record for each SIA instalment. For each instalment charge enter the

    • Year of the return in the Year Ending 5 April field
    • Due date of payment you established in step 5, in the Charge Due Date field
    • Charge type as ‘Net Underpayment’, and
    • Amount of the instalment in the IT field
  •  Use function AMEND RELEVANT DATES to change the relevant date for each instalment to the relevant due date of the balancing charge
  • Use function AMEND TAXPAYER SIGNALS to update the ‘Statutory Instalment Arrangement’ field to ‘Y’
  • In the SA user role ‘Time to Pay Officer’, enter the details of the instalment arrangement. The start date is the date of the first instalment, the debit type is ‘NUP’ and the due date of each instalment is the date the payment is payable (the statutory due date), not the date from which interest accrues (the relevant due date)
  • Use function MAINTAIN SA NOTES to indicate an SIA has been set up and enter your office numeral to show who the monitoring office is. Select from the SEES Notes Paster, Statutory Instalment section ‘Statutory instalment granted…’ and complete the appropriate details using the drop down boxes

7.  Write to the taxpayer confirming the terms of the arrangement. When you write

  • Enclose a manually completed payslip and request payment of the first instalment on or before the statutory due date unless payment has already been received
  • Advise that applications for payment of subsequent instalments will be by the issue of a taxpayer statement and that each instalment will be described as ‘Amount no longer included in PAYE code’
  • Explain that interest will be charged on each instalment from the relevant due date of the original balancing charge liability and say what that date is. Point out that payment(s) can be sent earlier than their statutory due date
  • Mention any other liabilities that are unpaid, in particular any amount of the balancing charge not included in the SIA that is overdue

8.  Review the SIA case shortly after each instalment due date to ensure payments are received and allocated correctly

9.  If exceptionally the amount due is amended, use the two CREATE functions in step 6 to amend the instalments to reflect the new liability

10.  Where an instalment (including the interest) has not been paid, the normal course of action should be taken to recover the unpaid amount(s)