SAM90001 - 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
• 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, where there is no following trust
• The creation of a trust SA record, where there is a following trust

Early settlement 

Under SA, liability for the year will usually be established upon submission of the SA return issued at the end of the year. However, a request may be received during the year to settle the taxpayer’s liability (including any earlier year’s liability) following the permanent cessation of all sources of income and gains liable to UK tax.

Wherever possible the return should be issued at the end of the year in the normal way. The issue of an in-year return should be restricted only to those cases where early settlement is requested. A Short Tax Return (SA200) should not be issued in such cases.

Early settlement may be requested during the year only in the following circumstances

• Death
• Emigration
• The winding up of a period of administration

If you receive a claim for early settlement and 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.

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
• Add to SA Permanent Notes the note ‘Manual Return signal set for year of permanent cessation (year). Unsolicited return received for final year. No further return required’