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HMRC internal manual

Self Assessment Manual

Permanent cessation: permanent cessation: introduction

When notified of the death or emigration of a taxpayer, there are various aspects of the taxpayer’s affairs that must be considered. Many of these remain unchanged as a result of the introduction of SA.

In addition to existing clerical procedures the following also need to be considered

  • Amendments to the taxpayer’s SA record
  • The issue of SA returns where appropriate
  • Requests for settlement of liability during the year of permanent cessation

And in deceased cases

  • The creation of a second SA record to handle income received during a period of administration, if the case is considered complex. For further information see TSEM7204
  • The creation of a trust SA record, where there is a following trust

Early settlement

Under SA for tax years up to, and including 2010-11, liability for the year was usually established upon submission of the SA return issued at the end of the year, but a request could be made during the year to settle the taxpayers liability (including any earlier years liability) following the permanent cessation of all sources of income and gains liable to UK tax. Early settlement may also be requested during the year in the following circumstances

  • Emigration
  • The winding up of a period of administration

If you deal with a case or receive a claim for early settlement where the taxpayer is a Student Loan Case, refer to the Collection of Student Loans (CSL) manual on the Intranet for details of how to deal with the Student Loan.

Early settlement is not the same as early finality. Since emigration may not be permanent there are no circumstances in which we would undertake not to make enquiries into an emigrant’s return. On the other hand a Compliance Officer may be prepared to give early finality to a deceased taxpayer’s personal representatives by confirming that an enquiry will not be opened.

Deceased cases

However, from 6 April 2012, the requirement to complete an SA return in every case was reconsidered. Alternatively, a form R27 was issued to the Personal Representative of the deceased customer for information, and early settlement offered without a specific request being made for it.

Where a completed form R27 was received and the information given indicated that a return was not necessary, the liability to date of death could be calculated using that information. However there were still be some cases where a return needed to be completed and a return was issued to the named Personal Representative when that person was established.

From 6 April 2014, the process was revised. A full ‘in-year’ return will be issued and recorded in Return Summary for the year of death, so no ‘end of year’ return will be required. From October 2014, the form R27 was decommissioned and new letters were introduced requesting Personal Representative and agent details.

When a response is received, a review will then be made to finalise the customers tax affairs and to decide if the record can be cleared using NPS reconciliation or if a return is still required. For further information, see subject Permanent cessation (SAM90010).

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Unsolicited returns

Where an unsolicited return is received for the year of permanent cessation, it should be dealt with as any other return for the final year. To ensure that a return is not issued for the year following cessation, you should

  • Set the Last SA Return Required For Year Ending 5 April signal to CY
  • Set the Manual Return signal in Emigration cases only
  • Add to SA Permanent Notes the note ‘Manual Return signal set for year of permanent cessation (year) (where appropriate). Unsolicited return received for final year. No further return required’