SAM106034 - Records: bankruptcy: bankruptcy: SA only record with no PAYE Source (Action Guide)

When you receive formal notification on form INSOL 200 of a bankruptcy order, and the SA record is not linked to a legacy system record, follow steps 1 - 19 below. The guide is presented as follows

Initial clerical action Steps 1 - 3
Existing pre-bankruptcy SA record Steps 4 - 9
New post-bankruptcy SA record Steps 10 - 19

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

Initial clerical action

1. Prepare an INSOL 100 sub-folder to hold the bankruptcy papers
2. Issue form INSOL 103 to the Official Receiver or trustee in bankruptcy. If the bankrupt taxpayer is a subcontractor you must send a copy of the BY notification to the centralised CIS Team in Newry at: CIS Newry, Custom House, Carnbane Way, Carnbane Industrial Estate, Newry BT35 6QG
3. Send a copy of INSOL 200 to
 
  • The office with processing responsibility (Employers Section) who have responsibility for the employer PAYE scheme , if the taxpayer is an employer who will deal with the cessation of any PAYE scheme

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Existing pre-bankruptcy SA record

4. Use function AMEND TAXPAYER SIGNALS to enter
 
  • Insolvency details
 
    • Solvency Status ‘Insolvent’
 
    • Insolvency Reference, using the pseudo reference BY0000/08 (BY0000/09 for 2009 and so on)
 
    • Relevant Date
 
  • Priority Colln Action (PCA) signal (this is important for Management Statistics purposes)
5. If there are any existing live capacity details shown on SA use TBS function AMEND CAPACITOR DETAILS to cease them. Do not use TBS to enter details of the Official Receiver as capacity
6. Use SA function SET UP CAPACITY DETAILS to enter details of the Official Receiver or trustee in bankruptcy as main capacity on the SA record. In Scotland ‘Other’ should be selected from the drop down menu and ‘Permanent Trustee’ entered in the Free Format Notes field (‘Trustee in Sequestration’ is not available in the drop down menu, and neither can it be entered in the limited space available in the notes field)
7. Use SA function AMEND TAXPAYER’S AGENT DETAILS to remove the agent details from the record and make a note of the agents details to update the post-bankruptcy record, where appropriate (see step 14). Make an SA Note of your actions
8. Use function AMEND TAXPAYER SIGNALS to
 
  • Enter the end of the year in which the bankruptcy order is made in the Last SA Return Required For Year Ending 5th April field, for example ‘08’
 
  • Set the Manual Return signal to ‘Y’, if today’s date falls between 6 April and the date of the automatic selection process for returns issue. (Note: The return is to be issued to the taxpayer, not the trustee / Official Receiver)
  • Where the annual selection process has already taken place before the Manual Return signal is set, as ‘BY Year’ returns must be captured using Local Data Capture (LDC), you must write to the taxpayer using OCA letter OCABY09
 
    • Enclose a manually issued form SA200, noted ‘BY Year’
 
    • Explain that it is too late to stop the automatically issued tax return and that it should be ignored. Add that the enclosed SA200 should be completed in its place and returned to the issuing office
 
  • Set the No Repayment signal to ‘Y’, to stop any overpayment being repaid automatically
 
  • Update SA Notes fully to show the position and confirm that a manual return for the year of bankruptcy needs to be completed. An online return cannot be completed for the year of bankruptcy. This UTR is only for the year up to the year in which the bankruptcy occurred
9. If you are dealing with a case in which the Official Receiver is the trustee, inhibit the statement following the advice in Action Guide ‘Request Inhibition of Statement’ (SAM131031) before the next statement is issued. Note: Where the Official Receiver (Insolvency Service) requests information in respect of a bankruptcy case, you should also send a manual statement
 
  • Follow the advice in Action Guide ‘Request Inhibition of Statements’ (SAM131031)
 
  • The statement inhibition should not be removed until 3 years following the tax year shown in the ‘Last SA Return Required’ field on the ‘Individual Signals’ page and there is no outstanding liability, or unallocated credits, on a statement. For example, at 6 May 2011, the Last SA Return Required field shows ‘09’ or earlier
  Notes:
a. Where a customer is registered for online services, the noting of ‘Official Receiver’ in the capacity details automatically de-enrols them from online services. If the customer registers again, the activation code is sent to the Official Receiver who then returns it to the Online Services team. If the customer contacts us, you should advise them that the bankruptcy year should be dealt with by completion of a manual return and they cannot file online. If they wish to file online for years following bankruptcy, they should re-register using the new post bankruptcy UTR
b. Where the trustee is not the Official Receiver only inhibit statements where the trustee makes such a request

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New post-bankruptcy SA record

10. After updating the pre-bankruptcy SA record with the capacity details you must wait overnight and check TBS. The TBS record must show that SA is dormant for you to continue with the steps below. If the TBS record does not show the SA record as dormant you cannot continue to set up a post-bankruptcy SA record. You must wait until it shows SA dormant.
  Note: Not all cases will need a post-bankruptcy SA record. This record will only be for cases that continue to fulfil SA criteria in that they continue in the trade / business / partnership they were involved in prior to bankruptcy or they commence a new business / trade / partnership. If form CWF1 / SA1 is received following bankruptcy for a new source of income, these can be set up using SET UP POST BY / VA INDIVIDUAL. This will ensure all correct information is transferred from the pre-bankruptcy record to the post-bankruptcy record.
11. Once the pre-bankruptcy SA record is shown on TBS as dormant, use function SET UP POST BY / VA INDIVIDUAL to create a new SA record for the taxpayer. You must use this function to set up a post-bankruptcy SA record. Once the UTR from the pre-bankruptcy record has been input, this function will
 
  • Automatically populate the post-bankruptcy record with data from the pre-bankruptcy record, including
 
    • Name, address and date of birth
 
    • NINO
 
    • Return details and signals
 
Note: The data and values on the screen can be amended at this stage
 
  • Automatically set the SA Entry / Exit Letter Inhibited signal to ‘Y’
 
  • Automatically store the UTR of the original record on the on-going SA record, and store the UTR of the on-going SA record on the original SA record
12. Use function SET UP POST BY / VA INDIVIDUAL to
 
  • Set the ‘Liability Unlikely’ signal for the year of bankruptcy. For example, enter ‘12’ where the year of bankruptcy is 2011-12 and make an SA Note.
     
    However if today’s date falls after the automatic selection process there is no need to set the ‘Liability Unlikely’ signal. You will not need to issue a return from this record for the year of bankruptcy (the return is to be issued from the bankruptcy record rather than new record).
     
    Note: There is no need to remove the ‘Liability Unlikely’ signal as tax returns will be issued automatically in the years following the year entered in the ‘Liability Unlikely’ field
 
  • Enter Communications Address details, where necessary, before using function MAINTAIN RETURN PROFILE
 
  • Enter new capacitor’s details, where necessary, before using function MAINTAIN RETURN PROFILE (the new capacitor will not be the Official Receiver as this is a post-bankruptcy record). Note: The ‘Abroad’ indicator cannot be set if a postcode is present
 
  • Issue OCA letter OCABY09
 
  • Use the ‘Return Profile’ button to access function MAINTAIN RETURN PROFILE to record the supplementary pages to be issued with the basic return
     
    Note: The information will flow overnight to the Citizen Identification (CID) Framework. If there is a current PAYE main source record a link will be created automatically between the SA record and the PAYE record
13. Where the source of income received is income from property
 
  • Enter a free format note in function AMEND TAXPAYER SIGNALS
14. If an agent was previously acting according to the pre-bankruptcy record, a new 64-8 is not required for this agent to be set up on the post-bankruptcy record. You cannot assume that following bankruptcy the agent no longer acts so you must use the same agent details on the post-bankruptcy record; unless you have been informed by either the taxpayer or the agent that they are no longer acting
15. Where there is a new agent acting and a new 64-8 has been received send to CAAT in accordance with SAM100200 for them to process
16. Where the individual taxpayer continues to have trading profits including profit from a profession or vocation (excluding a partnership trade source, which must be set up on the partnership record)
 
  • Use function SET UP TRADE, once for each trading source you want to set up. If the taxpayer has more than one trade / partner source, set up the main source first. Alternatively, where the SA record is not linked to PAYE, you can access function MAINTAIN SOURCES to nominate the main source
 
  • If the source is within the construction industry
 
    • Use function MAINTAIN COMPLIANCE SIGNALS to enter on the SA record the nature of the taxpayer’s involvement in the construction industry
17. Where the taxpayer continues to be a partner
 
  • Use function SET UP PARTNER, once for each partner source you want to set up (this creates a link between the individual taxpayer record and the partnership records)
     
    And where the SA record is not linked to PAYE
 
  • Use function MAINTAIN SOURCES to nominate the main source, if the taxpayer has more than one trade / partner source and you did not set up the main source first
  Where the taxpayer commences a new business / partner in a partnership post-bankruptcy form CWF1 / SA401 / SA402 should be completed and dealt with by CAAT in accordance with SAM100200 
18. Where the taxpayer is responsible for operating Class 1 NIC on a DC source of PAYE income, ask the Employers Section to
 
  • Open a Direct Collection (Employee Only NIC) scheme
 
  • Issue the information pack as detailed in the PAYE Manual
19. Where the taxpayer has indicated the requirement for special output, set the relevant signal, that is Audio, Braille or Large print. For Welsh Language cases only contact HMRC Welsh Contact Centre, Ty Moelwyn, Porthmadog, Gwynedd, LL49 9AB or WAM box 906
  Note: Do not create payments on account for the year of bankruptcy on the new SA record. Any payments on account due for the year of bankruptcy exist on the old SA record. Adjustment to the payments on account for the year of bankruptcy (old SA record) and any payments on account due for the following year (new SA record) will be sorted out on receipt of the return for the year of bankruptcy

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