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
- Non-UK resident - where to pay income tax? 150 5
- any help? 108 4
- HMRC turning post around in 11 - 12 weeks? 231 8
- Companies House? 185 3
- Defer,Accrue & Wip 70 1
- Rental Expenses 109 6
- UK tax exposure 198 3
- regulated mortgage work? 85 1
- Echosign mail merge? 277 1
- Before I call employers helpline 214 1
- VAT refund 387 4
- US LLC - anomaly in UK and US treatment 234 3
- flat rate scheme 332 7
- Deferred income - financial concern no recognised turnover CT600 220 2
- Are any of you members of The Institute of Financial Accountants - Accountnats certificate 554 6
- Director's Earnings when Drawing from Goodwill profit from Sole Trading Company sale to Ltd Company 279 2
- What do young accountants know that you don't? 2,059 9
- Company limited by guarantee having only 1 member 185 3
- capital allowances - Demolition of a building 197 2
- Limited by Guarantee - Members 137 1