HMRC can no longer reject a taxpayer’s claim for a refund of overpaid tax as “out of time”

HMRC can no longer reject a taxpayer’s claim for a refund of overpaid tax as “out of time”

HMRC can no longer reject a taxpayer’s claim for a refund of overpaid tax as “out of time”

It may now be time to revisit any tax refunds that may have previously been refused

The Upper Tax Tribunal has ruled that HMRC has no general right to refuse a taxpayer’s claim for a refund of overpaid tax going back more than 4 years. 

The case involved a taxpayer whose accountant prepared his Self-Assessment Tax Return for 2006/07 and sent it to his client for signature.  The taxpayer ticked the box to claim a refund for £27,000 but didn’t sign and date the form or return it to his accountant.

The taxpayer didn't realise he had failed to submit the return until November 2009 when HMRC sent the claimant a statement of his payments on account for the tax year in question.  HMRC subsequently refused to process the form or refund the overpaid tax stating that that s34(1) of the Taxes Management Act 1970 (TMA) sets a time limit on rebate claims, with the effect that no assessment to tax may be made later than 4 years after the end of the tax year concerned.  According to HMRC that included Self-Assessments.

The taxpayer disagreed and sought a judicial review of HMRC's decision, arguing that s34 TMA applied only to HMRC's assessments and that even if it did apply to Self-Assessments, HMRC had discretion to extend the deadline and should be made to do so under the European Convention on Human Rights.

The tribunal agreed with the taxpayer and rejected HMRC's position. 

Taxpayers have the right to file a self-assessment return many years after the end of the tax year concerned, and are automatically entitled to a rebate of any overpaid tax (Higgs v Revenue & Customs, 2015 UKUT 92 TCC).

Please get in touch if you would like to discuss the possibility of recovering any previously refused tax refunds on the back of this decision.

Steve Crompton
Partner – Head of Tax
direct dial: 01942 292541
mobile:  07790 840394
email:
steve.crompton@jsllp.co.uk

 

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