| Introduction |
| SA Procedures |
| Claim |
When a taxpayer who is an employee under PAYE, or in receipt of
payments under an occupational pension scheme, is subject to a
bankruptcy order the Employer’s Section will take action as
in the PAYE Manual in the business area Coding, General Principles,
Bankruptcy.. For 1996–1997 and later years all cases are
dealt with under Self Assessment (SA).
When you write or speak to an employer
never refer to the employee as bankrupt.
Only in those cases when it is anticipated that a dividend
will be received on submission of a claim, whether or not the
taxpayer is already subject to SA, send a memo to the Processing
Office asking for an estimate of the amount of PAYE (employment
income) tax if any to be provisionally included in your claim.
It is not necessary for an SA record to be set up for the year
of bankruptcy unless it is considered appropriate.
For a taxpayer with a dormant SA record it is reactivated
and used to deal with liability falling into the bankruptcy.
Live SA record
If the taxpayer has a live SA record it is used to deal with
liability falling into the bankruptcy. A second SA record is also
set up on dealing with the notification of bankruptcy.
The second SA record is used to deal with liability, if any,
in the year of bankruptcy which the taxpayer is liable to pay and
for years after the year of bankruptcy.
The main reason for setting up a second SA record is that it
is likely that live SA taxpayers will continue to be so in later
years.
If SA selection criteria are not present on the
taxpayer’s PAYE Service? record for later years the Annual
Maintenance process will list the second SA record for clerical
review (at which stage it can be made dormant).
Further information is provided at
INS6300 onwards
In cases when a dividend is expected you may have to claim
both SA debts
and the estimated Schedule E (employment income)
liability.
The form of words to be inserted in the claim depends on the
debtor’s employment position. If this information does not
accompany the estimate ask the Employer’s Section (in
Scotland EIS Edinburgh) to clarify.
… ‘a future or contingent liability to employment
income tax estimated at £[xx] in respect of emoluments
from[his][her] employment by [name of employer]’.
The dates to show are the start and end date of the relevant
tax year.
Employment ceases or changes
… ’a future or contingent liability to
employment income tax in the sum of £[xx] in respect of
emoluments from [his][her] employment by [name of employer]’
The dates to show are 6 April or, if later, the date
employment commenced to the date employment ceased.
Your claim will be in addition to any SA debts (
INS7235). Unless the Schedule E
(employment income) liability is later included by the debtor in an
SA return treat the claim as best and final.
