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Another "opt out of SA" question

Another "opt out of SA" question

An individual is a British citizen, UK domiciled, but resident and ordinarily resident overseas.  Her only UK source of income is rent derived from a property in the UK, which amounts to a constant net profit of £3K per annum (after mortgage interest), give or take a few quid, from which a UK personal allowance is deductible giving rise to no liability and wasted personal allowances of about £4K.  She has a NRL scheme ref and receives the rent gross.

It seems to me that such an individual should be able to get out of the annual hassle of completing SA returns, but HMRC have rejected our request, citing a de minimis limit of £2500 above which their policy is to issue return notices even if normally covered by allowances.  I have tried to find this in the manuals but run into problems.

One port of call was SAM101042 ("Criteria for auto removal of PAYE cases from SA"), to which a link was provided in another recent thread on a similar issue, and which I repeat here

This link is in fact totally irrelevant to my case because this individual has no PAYE record nor has had one in recent history.  I only mention it in this thread because I find it surprising that there is no corresponding section that deals with auto-removal of taxpayers who do NOT have a PAYE record.  I also find it odd that this page makes no reference to income from land or property, whether above or below £2500.  If anything it is unhelpful to my case because in the final sentence it states that cases dealt with by the ex pat unit are excluded from auto removal.

So, although rather unsatisfactory, I have resorted to those SAM sections which deal with the requirement to SET UP a SA record, in the hope that if the individual falls outside that criteria, then there should be a case for removal.

There appear to be two links that deal with this, depending on whether the individual has a PAYE income source.

With PAYE source, SAM100050:

Without PAYE source, SAM100060:

The reference SAM100050 to PAYE sourced individual contains a reference to £2500 limit, but surprisingly SAM100060 does not, and instead implies that ANY amount of income from property requires an SA record for someone not under PAYE.  I can see some logic to this: An individual with a PAYE source has the chance to have tax collected by PAYE coding restriction.  On the other hand, an individual without a PAYE source is more likely to have surplus personal allowances to cover the untaxed income..  The final sentence in SAM100060 does refer the viewer to SAM100050 but does not expressly say that the same de minimis criteria apply.

So, I guess after all that my question is: Is there an argument that I can put to HMRC to prevent this annual fiasco for this client?

With kind regards

Clint Westwood


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06th Mar 2012 12:22

Time & effort

The time & effort expended in trying to stop one issued would seem to be out of proportion to the work required in actually submitting the return. I appreciate there is a principle at stake but you have to pick your battles.

As you have found, HMRC has a strange aversion to releasing people from self assement even when there has been no real need for years and cannot understand that there is a cost in meeting this requirement


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06th Mar 2012 12:44

What he said

I have had clients 'released' from this requirement and people condemned to doing an SAR for several years all in circs identical to the one you mention.  

In your shoes, I'd equip them with the skills to do the thing online annually on an estimated basis.  Income £8,400, Loan Interest £4,000, Result - please go away,  It would take about 10 mins to jot down how to go about this, bill them for that and just let them go.

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By stt
06th Mar 2012 13:12

Quote the legislation


Where a notice has not been sent (too late for you perhaps, as if HMRC do now send one, you must complete the return), then TMA 1970 s7(7) states you are not required to notify HMRC if:

"A source of income falls within this subsection in relation to any person and any year of assessment if all income from it for that year is income on which he could not become liable to tax under a self-assessment made under section 9 of this Act in respect of that year"

As the rental income is not liabile to tax, then no notice is required.


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to raybackler
06th Mar 2012 16:08


@stt, thank you, and I appreciate your point.  The problem is that not every notice issued by HMRC under s.8 TMA 1970 is in response to a notice issued to them by the taxpayer under s.7.  Indeed I would defend the right of HMRC to issue a notice under s.8 without necessarily being in receipt of a notice under s.7.  In our client's case we have gone for years without issuing a s.7 notice to HMRC.

@ the others - yes thanks one and all.

With kind regards

Clint Westwood

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