© 2024 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
Procedure.Tax
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C1: Direct tax claims in general
Double tax treaty relief not automatic - must be claimed
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Income tax and corporation tax
"(2) Double taxation arrangements have effect in relation to income tax and corporation tax so far as the arrangements provide—
(a) for relief from income tax or corporation tax,
(b) for taxing income of non-UK resident persons that arises from sources in the United Kingdom,
(c) for taxing chargeable gains accruing to non-UK resident persons on the disposal of assets in the United Kingdom,
(d) for determining the income or chargeable gains to be attributed to non-UK resident persons,
(e) for determining the income or chargeable gains to be attributed to agencies, branches or establishments in the United Kingdom of non-UK resident persons, or
(f) for determining the income or chargeable gains to be attributed to UK resident persons who have special relationships with non-UK resident persons." (TIOPA s.6(2))
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Capital gains tax
(3)Double taxation arrangements have effect in relation to capital gains tax so far as the arrangements provide—
(a)for relief from capital gains tax,
(b)for taxing capital gains accruing to non-UK resident persons on the disposal of assets in the United Kingdom,
(c)for determining the capital gains to be attributed to non-UK resident persons,
(d)for determining the capital gains to be attributed to agencies, branches or establishments in the United Kingdom of non-UK resident persons, or
(e)for determining the capital gains to be attributed to UK resident persons who have special relationships with non-UK resident persons." (TIOPA s.6(3))
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"(6)Relief under subsection (2)(a), (3)(a) or (4) requires a claim." (TIOPA s.6(6))
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Business profits article is a relief and requires a claim
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"[52]...We start by noting the context in which the rival subparagraphs (a) and (d) sit in s. 6(2) TIOPA: namely a provision which gives effect to the double taxation arrangements. The menu of categories presented at (a) through to (g) accordingly reflect the different functional types of provision typically found in double taxation agreements. As Mr Vallat submitted, (and as the FTT in essence accepted at §117) the operation of the business profits Article 3(2) simply switches off a UK tax charge that would otherwise apply. The provision therefore plainly amounts to a relief. By contrast, s. 6(2)(d) references the exercise of attribution of income that must take place where for instance a non-UK enterprise has a permanent establishment in the UK. Double taxation agreements typically contain provisions specifying how that attribution is to be done (for instance through the arms’ length principle); subsection (d) gives effect to those provisions." (Hargreaves Property Holdings Limited [2023] UKUT 120 (TCC), Bacon J and Judge Raghavan - in relation to the obligation to withhold tax on interest)
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Apply normal time limit rules
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"[84] We have reached the conclusion that [HMRC] is right that if the Appellants were able to rely on Article 7, then they were required, in their self-assessment tax returns, to return the deemed income in accordance with the transfer of assets abroad provisions and then to claim relief in reliance on Article 7. Such a claim would come within section 788(3)(a) and had to be made by reason of section 788(6) and, further, had to be made within the time limit imposed by section 43 TMA 1970. Further, in response to the discovery assessments which were based on section 739 ICTA 1988 and sections 720 and 721 ITA 2007, the Appellants had to claim relief in reliance on Article 7 pursuant to section 788(3)(a) and (6) within the time limit imposed by section 43(2) TMA 1970. Such a claim would naturally come within the wording of section 788(3)(a)." (Davies v. HMRC [2020] UKUT 67 (TCC), Morgan J and Judge Andrew Scott)
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Normal time limits applies to claim for repayment of tax in reliance on treaty
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"[40] In the present case, HMRC has set out the legal basis for their contention that section 43 TMA applies to a claim under section 6(6) TIOPA in relation to Article 19 of the DTA. I have set out above the concatenation of legislation which links a claim under the DTA to the time limits set out in the TMA. I am satisfied that the links in that chain are robust and that the four year time limit does indeed apply to Mr Sikdar’s claim for repayment under Article 19 of the DTA.
[41] I therefore find that his claims are out of time." (Sikder v. HMRC [2023] UKFTT 362 (TC), Judge McKeever)
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See further: time limits for claims
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Making a claim
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- Meaning of claim: demand for something
“In the end, the question is one which depends simply on the proper construction to be placed on the words which the legislature has used and I find myself unable to deduce either from the words used or from the scheme of the section the rigid requirements for which the Crown contended.” (Gallic Leasing Ltd v. Coburn (Inspector of Taxes) [1991] STC 699 at 705).
“In Gallic Leasing Ltd v. Coburn (Inspector of Taxes) [1991] STC 699) the House of Lords considered what was required to constitute a claim. The case was concerned with group relief, but the point of principle is the same. The house held that no more was required than a general and unparticularised intimation of an intention to claim.” (R v. IRC ex p. Unilever plc [1996] STC 681 at 689).
“I consider that ‘claim’ should here be given its ordinary meaning. In this context it means a demand for repayment of overpaid tax.” (Reed Employment v. HMRC [2013] UKUT 0109 (TCC), §31).
“For there to be a “claim” it must constitute a demand for repayment of overpaid VAT…it is not a requirement that the claim must be such as to enable HMRC to determine the issue of overpayment, or that the claim should contain sufficient information as to enable a reasonably competent VAT officer to understand the way in which the amount claimed had been calculated.” (Bratt Auto Services Ltd v. HMRC [2014] UKFTT 676 (TC), §30).
“The various references to ‘claim’ in s.80 of the 1994 Act provide nothing to indicate that the word is to be given anything other than its ordinary meaning. Applying that meaning, a claim is a demand for something as due.” (University of Liverpool v. CEC VATD 16769, §25).
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- Interpret purported claim from perspective of reasonable HMRC officer
"[99] The Taxpayer contends that if the claims pursuant to paragraph 51 were invalid because there were no mistakes in the returns, then the claims may yet be properly characterised as claims for “full DTR”, including credit at the FNR. This is essentially an issue as to how the letter dated 15 December 2009 should properly be construed. It was common ground that we should give the letter the meaning it would convey to a reasonable HMRC officer having all the background knowledge which would reasonably have been available." (HMRC v. Applicants in Post Prudential Closure Notice Applications Group Litigation [2024] UKUT 23 (TCC), Richard Smith J and Judge Cannan)
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- Labels not determinative claim as to whether and what type of claim has been made
"[103] ... We must consider how a reasonable officer of HMRC would interpret the Taxpayer’s letter dated 15 December 2009. In doing so, we take into account the relevant circumstances in December 2009, including the stage of the group litigation. We accept that labels are not determinative, which is common ground. Hence the fact that the claim is described as a claim under paragraph 51 does not mean that it might not fairly be considered a claim for DTR." (HMRC v. Applicants in Post Prudential Closure Notice Applications Group Litigation [2024] UKUT 23 (TCC), Richard Smith J and Judge Cannan)
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- Claim for repayment of tax based on including exempt income not the same as a claim for tax credit in respect of that income
"[110] It is also relevant that there is no such thing as a claim for exemption. The income is either exempt under section 208 ICTA 1988 or it is chargeable. It is then included or omitted from the return and the computation of tax accordingly. If it is included, an appropriate claim for relief by way of credit must be made. The purpose of a claim is to give notice to HMRC of what is being claimed and in what amount. If a taxpayer does not state what is being claimed, then it cannot be said to have made a claim. Unless the taxpayer indicates that it is claiming credit, it is not entitled to credit. In our view, the Taxpayer cannot say one thing and be treated as saying another merely because it produces the same result. That was the point being made by Lewison LJ at the end of [30] in BTPS. We cannot see how a document which seeks repayment of tax on the grounds that foreign dividends are exempt can be construed as a claim for credit on the basis that they are taxable." (HMRC v. Applicants in Post Prudential Closure Notice Applications Group Litigation [2024] UKUT 23 (TCC), Richard Smith J and Judge Cannan)
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- SEIS compliance statement not a claim
“In my judgment this argument is misconceived. A compliance statement does not amount to a “claim”; it is instead what must be provided, in essence various items of information, before a company can be authorised to issue the compliance certificates which will later support the investors’ claims for relief. I do not see how the scope of the provision can be extended in the manner Mr Mackinnon’s argument requires.” (X-Wind Power Ltd v. HMRC [2016] UKFTT 317 (TC), §19).
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​- Unsolicited tax return showing a loss is a claim
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“…if a person files an unsolicited tax return for a particular year indicating that he or she has made a loss in that year, it would seem logical to treat the unsolicited return as a claim under s.42 TMA.” (Weerasinghe v. HMRC [2013] UKFTT 144 (TC), §40).
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Procedure for making a claim
"(1) Where any provision of the Taxes Acts provides for relief to be given, or any other thing to be done, on the making of a claim, this section shall, unless otherwise provided, have effect in relation to the claim." (TMA 1970, s.42(1))
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"“the Taxes Acts” means this Act and—
(a) the Tax Acts,
(b) the Taxation of Chargeable Gains Act 1992 and all other enactments relating to capital gains tax," (TMA 1970, s.118)
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Must be quantified
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"(1A) Subject to subsection (3) below, a claim for a relief, an allowance or a repayment of tax shall be for an amount which is quantified at the time when the claim is made." (TMA 1970, s.42(1A))
"A claim under any provision of the Corporation Tax Acts for a relief, an allowance or a repayment of tax must be for an amount which is quantified at the time when the claim is made." (FA 1998, Sch 18, para 54)
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Quantified means more than capable of being quantified
“The legislation is quite specific in requiring claims to be quantified and, as a matter of the normal use of language, we do not see that ‘quantified’ can be read as meaning ‘capable of being quantified’. In this case, it is true that the calculation needed was easy and obvious, but it may not always be the case of taxpayers whose affairs are not as straightforward as Mr Robins’s are, and the legislation is in terms which require certainty so that it can be ascertained without difficulty and debate what the taxpayer’s entitlement is.” (Robins v. HMRC [2013] UKFTT 514 (TC), §9, Judge Cornwell-Kelly)
Claim quantified in application to postpone tax
“However we accept that immediately prior to that he made a NVC claim, by way of an online request to reduce payments on account saying that “The Tax Allowances and reliefs have gone up”. He did not specifically make reference to a NVC, but it was clear that he was referring to his share loss relief claim and he provided the figures in his postponement application. The NVC was therefore quantified. He followed the procedure set out in Help sheet 286.” (Ward v. HMRC [2017] UKFTT 456 (TC), §42, Judge Connell).
Making claims by electronic communication
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"(1) The Commissioners for Her Majesty's Revenue and Customs may, by publishing them in a manner the Commissioners consider appropriate, give any claims directions that the Commissioners consider appropriate.
(2) In subsection (1) “claims directions” means general directions for the purposes of income tax relating to—
(a) the circumstances in which, and
(b) the conditions subject to which,
claims by individuals under the Tax Acts may be made by the use of an electronic communications service or otherwise without producing a claim in writing." (TMA 1970, s.43E(1) - (2) - see the restrictions in (3) - (5))
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"(1) If directions under section 43E(1) are in force in relation to the making of claims of any description to the Commissioners for Her Majesty's Revenue and Customs, claims of that description may be made to the Commissioners in accordance with the directions.
(2) If directions under section 43E(1) are in force in relation to the making of claims of any description to an officer of Revenue and Customs, claims of that description may be made to an officer in accordance with the directions.
(3) Subsections (1) and (2) apply despite any enactment or subordinate legislation which requires claims of the description concerned to be made in writing or by notice." (TMA 1970, s.43F(1) - (3))
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Income tax and CGT claims that can be included in a return must be made in return
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"(2) Subject to subsections (3) to (3ZC) below, where notice has been given under section 8, 8A or 12AA of this Act, a claim shall not at any time be made otherwise than by being included in a return under that section if it could, at that or any subsequent time, be made by being so included." (TMA 1970, s.42(2))
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Include via amendment
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"(5) The references in this section to a claim being included in a return include references to a claim being so included by virtue of an amendment of the return." (TMA 1970, s.42(5))
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Exclusion for claims taken into account for PAYE purposes
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"(3) Subsections (1A) and (2) above shall not apply in relation to any claim which falls to be taken into account in the making of deductions or repayments of tax under PAYE regulations." (TMA 1970, s.42(3))
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Exclusions for charitable trust exemptions and repayments
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"(3ZA) Subsection (2) above shall not apply in relation to any claim by the trustees of a charitable trust for an amount to be exempt from tax [by virtue of—
(a) section 521(4) of ITA 2007 (gifts entitling donor to gift aid relief: charitable trusts),
(b) section 532 of that Act (exemption for savings and investment income),
(c) section 533 of that Act (exemption for public revenue dividends),
(d) section 536 of that Act (exemption for certain miscellaneous income), or
(e) section 537 of that Act (exemption for income from estates in administration)" (TMA 1970, s.42(3ZA))
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"(3ZB) Subsection (2) also does not apply in relation to any claim for repayment of an amount of income tax which—
(a) is treated as having been paid by virtue of section 520(4) of ITA 2007 (gift aid relief: income tax treated as paid by trustees of charitable trust), or
(b) has been deducted at source from income to which any of the provisions mentioned in paragraphs (b) to (e) of subsection (3ZA) applies." (TMA 1970, s.42(3ZB))
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Exclusion for claims consequential on GAAR counteraction
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"(3ZC) Subsection (2) also does not apply in relation to any claim under section 210 of the Finance Act 2013 (claims for consequential relieving adjustments after counteraction of tax advantage under the general anti-abuse rule)." (TMA 1970, s.42(3ZB))
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Exclusion for election to transfer allowance to spouse or civil partner
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"(10A) Subsection (2) above does not apply in relation to an election under section 55C of ITA 2007 (election to transfer allowance to spouse or civil partner)." (TMA 1970, s.42(10A))
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Corporation tax claims that must be included in a return
Claims or elections affecting a single accounting period if the taxpayer is in time to include or amend
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"(1) This paragraph applies to a claim or election for tax purposes which affects only one accounting period (“the relevant accounting period”)."
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"(2) If notice has been given under paragraph 3 requiring a company to deliver a company tax return for the relevant accounting period, a claim or election by the company which can be made by being included in the return (as originally made or by amendment) must be so made." (FA 1998, Sch 18, para 57(1) - (2))
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Exceptions (gift aid, income tax deducted at source etc.)
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"(1A) This paragraph does not apply to a claim by a company for repayment of income tax treated as having been paid by virtue of—
(a) section 471 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies),
(b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or
(c) section 661D of that Act (gifts qualifying for gift aid relief: community amateur sports clubs).1
(1B) This paragraph also does not apply to a claim by a company for repayment of income tax deducted at source from income which is exempt from tax by virtue of—
(a) section 486 of the Corporation Tax Act 2010 (investment income and non-trading profits from loan relationships),
(b) section 487 of that Act (public revenue dividends),
(c) section 488 of that Act (certain miscellaneous income),
(d) section 489 of that Act (income from estates in administration), or
(e) section 664 of that Act (interest and gift aid income: community amateur sports clubs).
(1C) This paragraph also does not apply to a claim by a company for an amount to be exempt from tax by virtue of—
(a) section 472 of the Corporation Tax Act 2010 (gifts qualifying for gift aid relief: charitable companies),
(b) section 475 of that Act (gifts qualifying for gift aid relief: eligible bodies), or
(c) any of the provisions mentioned in sub-paragraph (1B)." (FA 1998, Sch 18, para 57(1A) - (1C)).
Claim that could be made by amending return treated as amendment
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"(3) If a company has delivered a company tax return for the relevant accounting period, a claim or election made by the company which could be made by amending the return is treated as an amendment of the return.
The provisions of paragraph 15 (amendment of return by company) apply." (FA 1998, Sch 18, para 57(3))
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Claims or elections by a company involving more than one accounting period if in time to amend
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"(1) This paragraph applies to a claim or election for tax purposes if—
(a) the event or occasion giving rise to it occurs in one accounting period (the period to which it “relates”), and
(b) it affects one or more other accounting periods (whether or not it also affects the period to which it relates).
(2) If a company makes a claim or election which—
(a) relates to an accounting period for which the company has delivered a company tax return and could be made by amendment of the return, or
(b) affects an accounting period for which the company has delivered a company tax return and could be given effect by amendment of the return,
the claim or election is treated as an amendment of the return.
The provisions of paragraph 15 (amendment of return by company) apply.
(3) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company if or to the extent that it is not—
(a) made by being included (by amendment or otherwise) in the company tax return for the accounting period to which it relates, and
(b) given effect by being included (by amendment or otherwise) in company tax returns for the accounting periods affected by it." (FA 1998, Sch 18, para 58)
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Other claims
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"(2) A claim to which Part VIII, IX or IXA of this Schedule applies (claims for group relief, capital allowances, first-year tax credits, R&D expenditure credits or R&D tax relief) can only be made by being included in a company tax return (see paragraphs 67, 79, 83ZA and 83B).
(2A) A claim to which Part IXB of this Schedule applies (claims for land remediation tax credit and life assurance company tax credit) can only be made by being included in a company tax return (see paragraph 83H).
(2B) ...
(4) A claim to which Part 9D of this Schedule applies (certain claims for tax relief under Part 15, 15A, 15B, 15C, 15D or 15E of the Corporation Tax Act 2009) can only be made by being included in a company tax return (see paragraph 83T).
(5) An election under section 1182(7) of the Corporation Tax Act 2009 (election not to be a film production company) can only be made by being included in a company tax return (see section 1182(8)(a) of that Act).
(6) An election under section 1216AE(7) of the Corporation Tax Act 2009 (election not to be a television production company) can only be made by being included in a company tax return (see section 1216AE(8)(a) of that Act).
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(7) An election under section 1217AB(6) of the Corporation Tax Act 2009 (election not to be a video games development company) can only be made by being included in a company tax return (see section 1217AB(7)(a) of that Act)." (FA 1998, Sch 18, para 10(2) - (7))
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Claims outside of a return
"(11) Schedule 1A to this Act shall apply as respects any claim or election which—
(a) is made otherwise than by being included in a return under section 8, 8A, or 12AA of this Act or a return under Schedule 2 to the Finance Act 2019" (TMA 1970, s.42(11))
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"(4) Schedule 1A to the Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company which cannot be included in a company tax return for the relevant accounting period.
This applies in particular to a claim or election made—
(a) before any notice is given under paragraph 3 requiring a company tax return for the relevant accounting period, or
(b) at a time when its return for the relevant accounting period cannot be amended." (FA 1998, Sch 18, para 57(4))
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"(1) Schedule 1A to the Taxes Management Act 1970 applies to a claim or election for tax purposes which is not within paragraph 57 or 58, whether or not it is included (by amendment or otherwise) in a company tax return.
(2) The provisions of this Schedule do not apply where or to the extent that the provisions of Schedule 1A apply." (FA 1998, Sch 18, para 59)
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- Must be made to an officer of the Board
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"(1) Subject to any provision in the Taxes Acts for a claim to be made to the Board, every claim shall be made to an officer of the Board." (TMA 1970, Sch 1A, para 2(1))
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"“the Board” means the Commissioners of Inland Revenue" (TMA 1970, s.118(1))
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- Claimant must have documentary proof of payment of tax reclaimed
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"(2) No claim requiring the repayment of tax shall be made unless the claimant has documentary proof that the tax has been paid by deduction or otherwise." (TMA 1970, Sch 1A, para 2(1))
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Form of claim outside return
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​- HMRC power to set down the form of the claim
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"(3) A claim shall be made in such form as the Board may determine.
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(5) The form of claim may require—
(a) a statement of the amount of tax which will be required to be discharged or repaid in order to give effect to the claim;
(b) such information as is reasonably required for the purpose of determining whether and, if so, the extent to which the claim is correct and;
(bb) the delivery with the claim of such accounts, statements and documents, relating to information contained in the claim, as are reasonably required for the purpose mentioned in paragraph (b) above;" (TMA 1970, Sch 1A, para 2(3), (5))
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Not usually exercised
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"Claims and elections to which Schedule 1A applies are to be made outside any return, to an officer of the Board, in such form as the Board may require. They must also contain a declaration that the particulars given are correctly stated ‘to the best of the information and belief of the person making the claim’. In practice, the Board does not normally determine forms for CT claims and the statutory requirement for the claim to contain a declaration is not normally insisted upon." (COM52030)
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- Negligible value claim (CGT)
[18] It is clear from the guidance contained in HMRC’s Internal Capital Gains Manual (at CG13135), which is headed How to make a negligible value claim – Time limit for claiming relief, that:
“There is no requirement for the claimant to make a claim to HMRC within a specified time of the asset having become of negligible value."
The guidance continues:
"Form of Claim
There is no specified form that must be used in order to make a negligible value claim. The claim it may be in any form the claimant chooses provided that it is made in writing and identifies:
• the claimant and their unique tax payer reference.
• the asset which is the subject of the claim (in the case of shares this would be the name of the company, the shares are held in, the class of shares on the number of shares held).
• the Value which is to be used as the consideration for the deemed disposal. Normally the value will be nil, but the claim should specify this.
• if the effect of the claim is to be back dated as per 224(2)(b) TCGA92, the earlier date when the claim is to take effect.
If a claim is sent outside of a tax return, it must also be signed by the claimant.
If you receive an indication that a negligible value claim is intended but the claim is not in the proper form, you should write to the claimant setting out the information which is needed to put the claim in the proper form.”
...
[25] However, I agree with Ms McDonald who appeared for HMRC, who contends it is clear from the words used in paragraph 2 of schedule 1A TMA that is necessary for a claim for negligible value to be made and that the Accountants letter of 6 September 2018 does not satisfy the necessary requirements for such a claim. It is not “in such form” as required by HMRC under paragraph 2(3) of schedule 1A to TMA and does not contain a declaration to the effect that “all of the particulars given in the form are correctly stated to the best of the information and belief of the person making the claim” as required by paragraph 2(4) of that schedule." (Williams v. HMRC [2023] UKFTT 429 (TC), Judge Brooks)
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- Overpayment relief
"[56] It was [HMRC's] submission that the required “form” was set out in HMRC’s Self Assessment Claims Manual (“SACM”), at chapter SACM12150; this is headed “overpayment relief”. The Tribunal agrees: it is clear from SACM12005 that by “overpayment relief”, HMRC means claims made for the repayment of tax in accordance with Sch 1AB.
[57] SACM12150 is headed “Form of claims” and includes the following text:
“Overpayment relief claims must be made in writing and
· must clearly state that the person is making a claim for overpayment relief
· 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, you must have documentary proof of the tax deducted or suffered in some other way as you may be required to provide this at a later date - see SACM3015
· 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
· state the amount that the person believes they have overpaid.” (Phelan v. HMRC [2023] UKFTT 29 (TC), Judge Redston)
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“It seems to me, however, that HMRC had prescribed a particular form for claims made under paragraph 51 Schedule 18 FA 1998 in Revenue & Customs Brief 22/10.” (Spring Capital Ltd v. HMRC [2015] UKFTT 0066 (TC), §269).
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- Subject to which, it may be included in any document
“It seems to me that, if the formal requirements for a paragraph 51 claim was satisfied, the fact that the claim happened to be included in a letter which gave notice of appeal does not make it an invalid claim.” (Spring Capital Ltd v. HMRC [2015] UKFTT 0066 (TC), §270).
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- Must include declaration of correctness
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"(4) The form of claim shall provide for a declaration to the effect that all the particulars given in the form are correctly stated to the best of the information and belief of the person making the claim." (TMA 1970, Sch 1A, para 2(4))
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In practice
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"Claims and elections to which Schedule 1A applies are to be made outside any return, to an officer of the Board, in such form as the Board may require. They must also contain a declaration that the particulars given are correctly stated ‘to the best of the information and belief of the person making the claim’. In practice, the Board does not normally determine forms for CT claims and the statutory requirement for the claim to contain a declaration is not normally insisted upon." (COM52030)
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- Power to require affidavit in support from non-resident/non-domiciliary
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"(6) In the case of a claim made by or on behalf of a person who is not resident, or who claims to be not resident or not domiciled, in the United Kingdom, an officer of the Board or the Board may require a statement or declaration in support of the claim to be made by affidavit." (TMA 1970, Sch 1A, para 2(6))
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No appeal against decision not to admit a claim that is not in required form
FTT will decide if claim is in required form, but if it is not, no appeal against refusal
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"[26] Ms McDonald quite properly accepts that HMRC, rather than seeking clarification as to whether it should have assumed that a negligible value claim was being made, ought to have responded to the Accountants letter of 6 September 2018 by explaining, in accordance with its own guidance, what was needed to put the claim in the proper form and set out the information needed.
[27] However, as to whether or not the claim is in the required “form” and HMRC’s failure to notify Mr Williams of how it could be corrected to comply, is in the absence of a right of appeal under s 31 TMA, a matter for HMRC (and possibly a formal complaint, reference to the Adjudicator and/or judicial review) rather than the Tribunal.
...
[30] The applicable legislation, s 31 TMA, does not contain any right of appeal against HMRC’s decision not to admit a negligible value claim that is not in the required form and consequently not valid. Given that the Tribunal’s jurisdiction is governed by that legislation, it follows that the Tribunal does not have the jurisdiction to determine this issue or consider the conduct of HMRC not to allow the claim or refer the appellant to the appropriate guidance." (Williams v. HMRC [2023] UKFTT 429 (TC), Judge Brooks)
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Giving effect to claims for discharge of tax made outside of a return
"(1) Subject to sub-paragraphs (1A), (3) to (5) below an officer of the Board or the Board shall, as soon as practicable after a claim other than a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment by discharge or repayment of tax.
(1A) In relation to a claim which would otherwise fall to be taken into account in the making of deductions or repayments of tax under PAYE regulations, sub-paragraph (1) above shall apply as if for the word “shall” there were substituted the word “may”.
(2) Subject to sub-paragraphs (3) to (5) below, An officer of the Board or the Board shall, as soon as practicable after a partnership claim is made, or such a claim is amended under paragraph 3 above, give effect to the claim or amendment, as respects each of the relevant partners, by discharge or repayment of tax.
(4) Nothing in this paragraph applies in relation to a claim or an amendment of a claim if the claim is not one for discharge or repayment of tax.
(5) This paragraph has effect subject to any provision in the Taxes Acts that—
(a) requires or allows effect to be given to a claim by other means, or
(b) provides that an amount is not to be discharged or repaid." (TMA 1970, Sch 1A, para 4(1) - (2), (4) - (5))
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No obligation to give effect to claim that is enquired into until enquiry completed
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"(3) Where any such claim or amendment as is mentioned in sub-paragraph (1) or (2) above is enquired into by an officer of the Board—
(a) that sub-paragraph shall not apply until the day on which, by virtue of paragraph 7(1) below, the enquiry is completed; but
(b) the officer may at any time before that day give effect to the claim or amendment, on a provisional basis, to such extent as he thinks fit." (TMA 1970, Sch 1A, para 4(3))
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No obligation to give effect to disputed claim pending appeal
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"Paragraph 4 of schedule 1A to TMA requires HMRC to give effect to a claim "as soon as practicable after a claim…is made". Time for limitation purposes would not start to run until it became practicable to give effect to the claim. While an appeal to the FTT is pending, and the entitlement of the taxpayer to the claim has yet to be determined, it cannot be said to be "practicable" to give effect to the claim." (Knibbs v. HMRC [2019] EWCA Civ 1719, David Richards LJ)
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Partnership claims
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Claims to be included in partnership return
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"(6) In the case of a trade, profession or business carried on by persons in partnership, a claim under any of the provisions mentioned in subsection (7) below shall be made—
(a) where subsection (2) above applies, by being included in a partnership return
[...]
(7) The provisions are—
(a) 471, 472, 570, 571(4) and 732(4) of the principal Act;
(b) …
(c) sections 3, 83, 89, 129, 131, 135, 177, 183, 266, 268, 290, 355, 381 and 569 of the Capital Allowances Act;
(d) sections 40B(5), 40D, 41 and 42 of the Finance (No 2) Act 1992
(e) sections 25A, 111(1), 126(2), 129(2), 143, 185, 194, 271A(10) and 326 of ITTOIA 2005.
(f) sections 668 and 669 of ITA 2007 and
(g) sections 109(1), 124(2), 127(2), 178 and 268 of CTA 2009." (TMA 1970, s.42(6)(a) - (7))
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Other claims to be made by nominated partner
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"(6) In the case of a trade, profession or business carried on by persons in partnership, a claim under any of the provisions mentioned in subsection (7) below shall be made—
[...]
(b) in any other case, by such one of those persons as may be nominated by them for the purpose." (TMA 1970, s.42(6)(b))
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Supplementary claims
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"(9) Where a claim has been made (whether by being included in a return under section 8, 8A, or 12AA of this Act or otherwise) and the claimant subsequently discovers that an error or mistake has been made in the claim, the claimant may make a supplementary claim within the time allowed for making the original claim." (TMA 1970, s.42(9))
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"A company which has made a claim or election under any provision of the Corporation Tax Acts (by including it in a return or otherwise) and subsequently discovers that a mistake has been made in it may make a supplementary claim or election within the time allowed for making the original claim or election." (FA 1998, Sch 18, para 56)
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Query whether this excludes the possibility of amending a claim before it is finally determined as is possible in relation to VAT claims - see C8: VAT Claims.
Query also whether reliance can be placed on TMA 1970, s.50(6) to ask the Tribunal to adjust the amount of the claim in the taxpayer's favour.
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On unrelated appeal taxpayer can claim relief for overpayment in same return
“It seems right that if HMRC put the correctness of one aspect of a tax return in issue, they must accept that the taxpayer can counter by proving (if he can) that another aspect of the same tax return was unduly favourable to HMRC, even if the taxpayer would be out of time to make a stand-alone correction under s 9ZA. That must be especially the case here, where the dividends and benefit in kind were an issue in the appeal in any event, at least in respect of 2010 and 2011.” (Vowles v. HMRC [2017] UKFTT 704 (TC), §163, Judge Mosedale).
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Claims involving more than one year of assessment
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"(11A) Schedule 1B to this Act shall have effect as respects certain claims for relief involving two or more years of assessment." (TMA 1970, s.42(11A))
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Does not apply to all claims
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"Turning to the TMA, it is true that words of Schedule 1B taken on their own would be apt to apply to a claim under sections 132-133. However, I do not regard that as enough to displace the clear provisions of the ITA in respect of liability. I do not see this as turning so much on whether one set of provisions is more specific than the other, but rather on the fact that the ITA is in principle the governing statute in respect of tax liability, and as such should take precedence in the absence of any indication to the contrary." (R (oao Derry) v. HMRC [2019] UKSC 19 in respect of a claim for share loss relief under ITA s.132)
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Carry back of losses
"(1) This paragraph applies where a person makes a claim requiring relief for a loss incurred or treated as incurred, or a payment made, in one year of assessment (“the later year”) to be given in an earlier year of assessment (“the earlier year”).
(2) Section 42(2) of this Act shall not apply in relation to the claim.
(3) The claim shall relate to the later year.
(4) Subject to sub-paragraph (5) below, the claim shall be for an amount equal to the difference between—
(a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and
(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”).
(5) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year.
(6) Effect shall be given to the claim in relation to the later year, whether by repayment or set-off, or by an increase in the aggregate amount given by section 59B(1)(b) of this Act, or otherwise.
(7) For the purposes of this paragraph, any deduction made under section 62(2) of the 1992 Act (death: general provisions) in respect of an allowable loss shall be deemed to be made in pursuance of a claim requiring relief to be given in respect of that loss." (TMA 1970, s.1B, para 2)
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Meaning of associated claims
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"(2) For the purposes of this Schedule, two or more claims made by the same person are associated with each other if each of them is a claim to which this Schedule applies and the same year of assessment is the earlier year in relation to each of those claims.
(3) In sub-paragraph (2) above, any reference to claims includes a reference to amendments and revocations to which paragraph 4 below applies." (TMA 1970, s.1B, para 1(2) - (3))
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Claim relates to year of loss
“As to (a), it is clear that the terminal loss which is the subject matter of the Claim “relates” (within the meaning of paragraph 58 Schedule 18) to the final 18 month accounting period and is properly to be contained in the 2004 and/or 2005 returns. The Claim thus relates to matters which had to be included in the 2004 and/or 2005 returns.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §40).
No analogous provision for corporation tax
“I accept as regards income tax the effect of the carry back claim is on the tax liability of the later period and there is no analogous provision in regard to corporation tax.” (Spring Salmon & Seafood Limited v. HMRC [2017] UKUT 205 (TCC), §119, Lord Bannatyne).
Claim should be made in relation to year of loss and does not affect tax position in earlier year
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"[28] If a taxpayer wished to carry back part of the losses incurred in Year 2 to set off against his income of Year 1 by invoking section 380(1)(b) of ICTA, he would also have to make the claim in his return for Year 2. This is the combined effect of section 8(1AA)(a) and Schedule 1B paragraphs 2(3) and (6). As shown in para 18 above, those paragraphs provide that the claim for relief relates to Year 2 and effect is to be given to that claim in relation to Year 2. If HMRC had already given effect to part of the claim under Schedule 1A in Year 1 by giving relief, for example by repayment, the return for Year 2 would still have to state the loss, the claim and the relief already given in order to establish the amounts in which the taxpayer is chargeable to income tax in Year 2. Similarly, if the taxpayer had already received full relief under Schedule 1A in Year 1, he would have to state the same information as to the loss, the claim and the relief already given. By so doing he enables the return to “take into account”, as section 8(1AA)(a) requires, both the relief which is claimed in the return and that which he has already received. In each case that information is a necessary part of his return for Year 2 as it is information required “for the purpose of establishing the amounts” in which the taxpayer is chargeable to income tax for that year of assessment: section 8(1)." (R (oao De Silva) v. HMRC [2017] UKSC 74)
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“[The taxpayer’s submission that the claim did affect its appeal against closure notice in respect of the earlier tax years] is to confuse the contents of the return and the assessment with the manner of giving effect to section 393A. On the basis that the Claim was not made in a return, effect is given to the relief by a repayment of tax. This does not, as I have said, necessitate an amendment to the 2002 or 2003 returns. The returns should reflect the actual results for the relevant earlier accounting periods with the relief being given separately under paragraph 4(1) Schedule 1A.” (Spring Salmon & Seafood Ltd v. HMRC [2014] UKUT 488 (TCC), §47).
Method of giving effect to claim can be challenged on appeal against late penalty
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"[60] Here, a claim has not been given effect to in the way sought. That is the cause. Were there no penalty, then Mr Simpson QC might well be right as to the absence of any right of challenge in this Tribunal. But the matter does not end there because there is a penalty, and the tax-geared penalty for 2014/15 has ended up different to what it would otherwise have been had the loss been set-off against 2014/15.
[61] The discussion and reasoning above apply: the effect is the amount of the penalty, the amount of the penalty is an appealable matter, and the amount of the penalty is in dispute. That is not circuitous: it is the direct consequence of HMRC issuing the penalty." (Crawford v. HMRC [2022] UKFTT 37 (TC), Judge McNall)
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Carry back of post-cessation receipts
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"(1) This paragraph applies where a person who has received a sum to which section 257 of ITTOIA 2005 applies (election for carry-back) makes an election under that section requiring tax to be charged as if the sum were received on the date of the cessation; and in this paragraph—
“the earlier year” means the year in which the sum is treated as received;
“the later year” means the year in which the sum is received.
(2) The claim shall relate to the later year.
(3) Subject to sub-paragraph (4) below, the claim shall be for an amount equal to the difference between—
(a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and
(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”).
(4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year.
(5) In computing amount B for the purposes of this paragraph, no further deduction or relief shall be made or given in respect of any loss or allowance deducted in pursuance of section 254 of ITTOIA 2005.
(6) Effect shall be given to the claim in relation to the later year by an increase in the amount of tax payable." (TMA 1970, Sch 1AB, para 5)
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Relief for fluctuating profits of farming etc. and creative works
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"(1) This paragraph applies where a person who is or has been carrying on a qualifying trade, profession or vocation (within the meaning of Chapter 16 of Part 2 of ITTOIA 2005) claims that Chapter 16 of Part 2 of ITTOIA 2005 shall have effect in relation to his profits from that trade, profession or vocation —
(a) in the case of a two-year claim, for two consecutive years of assessment, and
(b) in the case of a five-year claim, for five consecutive years of assessment.
(2) The claim shall relate to the last of the two or five years.
(3) Subject to sub-paragraph (4) below, in so far as the claim relates to the profits of an earlier year, the claim shall be for an amount equal to the difference between—
(a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and
(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”).
(4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year.
(5) In so far as the claim relates to the profits of an earlier year, effect shall be given to the claim in relation to the last of the two or five years by an increase in the amount of tax payable or, as the case may require, in the aggregate amount given by section 59B(1)(b) of this Act.
(6) Where this paragraph applies twice in relation to the same year of assessment, the increase or reduction in the amount of tax payable for that year which is required by sub-paragraph (5) above on the earlier application shall be disregarded in determining amounts A and B above for the purposes of the later application.
(7) In this paragraph—
“two-year claim” means a claim under section 222 of ITTOIA 2005;
“five-year claim” means a claim under section 222A of ITTOIA 2005." (TMA 1970, Sch 1AB, para 3)
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"(1) This paragraph applies where—
(a) a person who claims that Chapter 16 of Part 2 of ITTOIA 2005 shall have effect for two or five consecutive years of assessment makes or amends a claim for relief under any other provision of the Income Tax Acts for any of those years; and
(b) the making or amendment of the claim would be out of time but for section 224(4) of that Act.
(2) The claim or amendment shall relate to the last of the two or five years.
(3) Subject to sub-paragraph (4) below, in so far as the claim or amendment relates to income of an earlier year, the amount claimed, or (as the case may be) the increase or reduction in the amount claimed, shall be equal to the difference between—
(a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and
(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim or amendment in relation to that year (“amount B”).
(4) Where effect has been given to one or more associated claims, amounts A and B above shall each be determined on the assumption that effect could have been, and had been, given to the associated claim or claims in relation to the earlier year.
(5) In so far as the claim or amendment relates to income of an earlier year, effect shall be given to the claim or amendment in relation to the last of the two or five years by an increase in the amount of tax payable or, as the case may require, in the aggregate amount given by section 59B(1)(b) of this Act.
(6) In this paragraph “amend” includes revoke and “amendment” shall be construed accordingly." (TMA 1970, Sch 1AB, para 4)
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Elections treated in the same way as claims
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"(10) This section (except subsection (1A) above and subject to subsection (10A) below shall apply in relation to any elections as it applies in relation to claims" (TMA 1970, s.42(10))
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"(10A) Subsection (2) above does not apply in relation to an election under section 55C of ITA 2007 (election to transfer allowance to spouse or civil partner)." (TMA 1970, s.42(10A))
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Acceptance of a claim
Objective approach to acceptance
“approval is given by HMRC to a method used or to be used by the taxpayer for calculating recoverable input tax if HMRC conduct themselves in such a way that their conduct would convey to a reasonable man in the circumstances of the taxpayer (a) that HMRC knew what method was being used or proposed, (b) that they had considered it, (c) that they had agreed to it, and (d) that there conduct constituted the communication of those elements.” (DFS Furniture v. HMRC [2009] UKFTT 204 (TC), §196 in the context of approving partial exemption special methods; and see Imperial College of Science, Technology & Medicine v. HMRC [2015] UKFTT 0033 (TC), §130).
Distinguishing acceptance/approval and allowing
“ 'Approve’ to our minds has different connotations from ‘allow’. ‘Approve’ suggests some demonstration of consent, whereas ‘allow’ encompasses simply letting something happen.” (DFS Furniture v. HMRC [2009] UKFTT 204 (TC), §189 in the context of approving partial exemption special methods; and see Imperial College of Science, Technology & Medicine v. HMRC [2015] UKFTT 0033 (TC), §128).
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Obvious HMRC mistake negates acceptance
“If what HMRC apparently approved is so odd, so contrary to the spirit of attribution based on use that ‘there must have been some mistake’, then it could not be said approval had been given because it would be clear that the objectively obvious mistake meant they had not truly approved.” (DFS Furniture v. HMRC [2009] UKFTT 204 (TC), §198 in the context of approving partial exemption special methods; and see Imperial College of Science, Technology & Medicine v. HMRC [2015] UKFTT 0033 (TC), §134).
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Rejection of a claim
Final determination following consideration of merits
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“We do not consider that the December letter could reasonably amount to the rejection of a claim. In reaching that conclusion we are not so much concerned with the absence of any reference to rights of appeal, which the VAT Tribunal in John Martin Group considered to be significant. That fact would be more relevant to an application to appeal out of time if one were made. Rather it is the absence of any final determination of the claim following a consideration of its merits.” (Websons (8) Ltd v. HMRC [2013] UKFTT 229 (TC), §58).
Form of rejection
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“[HMRC Manual VR9200] states as follows:
“Whenever a claim is refused, either in whole or in part, you must ensure that
the claimant is told in writing that the claim has been refused;
the letter explains why the claim is being refused;
the claimant is told of his right to ask for a review of the decision and of his right to appeal to the Tax Tribunal (under section 83(c) or (t)); and
the claimant is told that he has 30 days from the date of the letter in which to lodge his appeal.”
We accept this is how HMRC must deal with a claim which has been validly made.” (Websons (8) Ltd v. HMRC [2013] UKFTT 229 (TC), §§56…57)
Distinction between rejection and asking for further information
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“They are also of course entitled to seek further information before accepting or refusing a claim. They requested further information in the letter dated 4 October 2006. In their letter dated 18 December 2006 they identify that evidence to support the claim is required. The letter also gives information to the appellant setting out how HMRC would deal with claims so that the appellant could consider what course of action to take…The appellant was being given the opportunity to confirm to HMRC that it still considered it had a valid claim. We do not consider that the December letter could reasonably amount to the rejection of a claim.” (Websons (8) Ltd v. HMRC [2013] UKFTT 229 (TC), §§57…58).
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Withdrawing or abandoning a claim
Withdrawal requires a conscious decision and some act
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“In the absence of any authority directly in point it seems us that withdrawal requires a conscious decision on the part of an appellant to withdraw the claim and some act of withdrawal.” (Websons (8) Ltd v. HMRC [2013] UKFTT 229 (TC), §65).
Abandonment as an objective test
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“In contrast a claim might be abandoned where by his conduct an appellant induces HMRC to reasonably consider that he no longer wishes to pursue the claim. The question of abandonment might be tested by reference to whether a reasonable observer, fully appraised of the facts, would consider that the claim had been abandoned…We can see why HMRC might reasonably have considered that the claim had been abandoned given the absence of any response to the October and December letters. However with knowledge that the December letter had not been received by the appellant and knowing that there was ongoing litigation in relation to the VAT liability of gaming machines, in our view a reasonable observer would not reach the conclusion that the appellant had abandoned its claim.” (Websons (8) Ltd v. HMRC [2013] UKFTT 229 (TC), §66).