Claims for repayment of tax are usually made through the submission of a tax return, whether as an individual or a company the time limit for amending a tax return is usually one year from the filing deadline for submitting the return.
The amendment may result in a repayment of tax but if the time limit for amending a return has passed then the only way a taxpayer can claim is by submitting an overpayment relief claim. Under this relief, the general rule is that repayment cannot be claimed more than four years after the end of the tax year to which the claim relates for personal taxes (i.e. for a 2018/19 tax return claim the deadline is 5 April 2023), and four years from the end of the accounting period for corporation tax after the end of the relevant tax year.
How to claim
The claim process should be relatively straightforward; however, this is one occasion whereby HMRC insists that the claim is in a set format or it can be refused.
The claim must be in writing, signed by the taxpayer themselves or someone entitled to sign on their behalf, e.g. a person who has a lasting power of attorney for the taxpayer’s financial affairs, but not an accountant. For a company, the claim must be signed by someone with authority to sign for the company, e.g. a director.
HMRC requires the claim to clearly state that the person is making a claim for overpayment relief. The best way for doing that is to quote the section of the taxes acts under which the repayment is being made (i.e. ‘This claim is being made under Sch 1AB Taxes Management Act 1970‘ for personal taxes, or ‘para. 51 schedule 18 Finance Act 1998‘ for corporation tax. The claim must also:
- identify the tax year or accounting period for which the overpayment or excessive assessment has been made
- state the grounds on which the person considers that the overpayment or excessive assessment has occurred
- state whether the person has previously made an appeal in connection with the payment or the assessment
- if the claim is for repayment of tax, provide documentary proof of the tax deducted or suffered
- state the amount of overpayment
- state the tax year to which the overpayment relief relates
- state why the overpayment arose
- the amount of tax that has been overpaid
- whether an appeal has been made in the past in connection with the overpayment; and
- if the claim results in a refund, proof that the tax being reclaimed has been paid
- include a declaration signed by the claimant stating that the particulars given in the claim are correct and complete to the best of their knowledge and belief
When the claim will be disallowed
In HMRC’s manual ‘Self-Assessment Claim’ under the section ‘SACM12065 – Overpayment relief: Exclusions’ it is stated that HMRC will not accept an overpayment claim where the tax charged is excessive in any of the following circumstances (examples of each are also given):
- a mistake in calculating the tax liability, and that liability was calculated in accordance with the practice generally prevailing at the time. Where the mistake is in a PAYE assessment or calculation, the practice being as generally prevailing at the end of the tax year following that for which the assessment or calculation has been made.
- a mistake in an election, claim or notice
- a mistake in the allocation of expenditure to a pool for capital allowances purposes or the bringing in of a disposal value for such purposes
- the claimant knew (or should have known) of the grounds for the claim before the latest of the date an appeal relating to the tax charged was determined by a court or tribunal, the date on which such an appeal was withdrawn by the claimant, and the date by which such an appeal could have been made
- the tax was due as a result of proceedings by HMRC against the claimant or under an agreement in settlement of any such proceedings
- the claim is made on grounds that have been already put to a court or tribunal in the course of an appeal.