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Procedure.Tax
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C4: Income tax claims
Claim to avoid double taxation
"(1) If on a claim made to the Board it appears to their satisfaction that a person has been assessed to tax more than once for the same cause and for the same chargeable period, they shall direct the whole, or such part of any assessment as appears to be an overcharge, to be vacated, and thereupon the same shall be vacated accordingly.
(2) An appeal may be brought against the refusal of a claim under this section.
(3) Notice of appeal under subsection (2) must be given—
(a) in writing;
(b) within 30 days after the day on which notice of the refusal is given;
(c) to the officer of Revenue and Customs by whom that notice was given.” (TMA 1970 s.32(1))
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"“tax”, where neither income tax nor capital gains tax nor corporation tax nor development land tax is specified, means any of those taxes." (TMA 1970, s.118(1))
“No-one has ever supposed for a moment that the Revenue were intending to levy double taxation or doing anything other than keep open the various alternatives until the uncertainties as to whether the taxpayers had been engaging in trade and, if so, whether they had been so doing as individuals or partners had been resolved. It was obviously intended by the Revenue that if it were established that the taxpayers had been trading the capital gains tax assessment would fall away, and that if it were established that the taxpayers had not been trading the income tax assessments would fall away… I have been told that this provision [s.32] was intended to provide relief against double taxation. It would enable Mr. Coren, on whom the capital gains tax assessment was made, to reclaim the whole capital gains tax in the event that the income tax assessment on him and Mrs. Coren together was confirmed.” (Bye v. Coren 60 TC 116).
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- Broad approach to the same cause
“In Coren the chargeable gain arose as a result of the disposal of the metals, and so did the Case I profit, and it seems it was obvious to Scott J that this was the “same cause”. In this case the gain also arose from the disposal of the shares, but the income tax charge arose on their acquisition, microseconds before the disposal. But we consider it would be pedantic in the extreme, not to say perverse, for us to hold that that makes a difference. We would hold that a “cause” covers all aspects of the same transaction, and we are fortified in this view by the very existence of ss 119A and 120 TCGA which clearly see a sufficient nexus between the acquisition and the disposal for there to be given the relief for which they provide.” (Norman v. HMRC [2015] UKFTT 303 (TC) Annex 2, §30)
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- Where payment made by company to another, PAYE and corporation tax on that same payment do not fall within relief
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"[32] In essence Mr Simpson is arguing that it is unfair that, since the schemes did not work, Darvel should have to account for PAYE and NIC yet the tax that was paid as part of those schemes is also retained by HMRC. Effectively he argues that the corporation tax should now be re-characterised because HMRC’s stance is inconsistent.
...
[51] Although the funds effectively came from one “pot”, namely Darvel, I am not convinced that it can be viewed or treated as the same money. In diverting the money into Services, Retail and Reedon the structure of the transactions triggered different treatments for tax purposes. The funds acquired different characteristics as they moved through the various entities and that was entirely the choice of those entities, albeit directed by Mr Donald.
[52] The key distinction with McKenna is that in that case it was a matter of agreement that the various assessments were mutually exclusive: tax was only payable on the same sum once.
[53] Collection of PAYE and NIC on payments to employees is not an alternative to self-assessed corporation tax in another entity. They are not mutually exclusive. There is no double taxation on the same income." (James H Donald (Darvel) Ltd v. HMRC [2017] UKFTT 446 (TC), Judge Anne Scott)
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- Potential late claim or appeal where not engaged
“[31] We would further add that in Coren, Scott J suggested that another remedy for the Corens would be a late appeal against the CGT assessments which he strongly hinted should be accepted by HMRC, and this remedy was also suggested by Lawton LJ in the Court of Appeal. The High Court hearing was in November 1984 and the assessments for 1978-79 and 1979-80, so the gap was longer in that case than it is in this. Of course one difference is that then a taxpayer could appeal against any assessment, but now they cannot appeal against a self-assessment. But it does suggest that should the appellant be entitled to claim under s 33 of, and Schedule 1AB to, TMA, HMRC should look sympathetically on such a claim being made late in the circumstances here. But if they accept that s 32 TMA applies, and that it has no time limit, the question of a late claim does not arise.” (Norman v. HMRC [2015] UKFTT 303 (TC) Annex 2, §31)
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Personal allowance
Technically, the personal allowance for income tax purposes must be claimed and thus can, in theory, be rejected by a taxpayer. That may be advantageous where the absence of any taxable income will prevent EIS relief being claimed, as in Ames v. HMRC [2015] UKFTT 337 (TC).
“We agree with Mr Ames that the statute requires that the personal allowance be claimed.” (Ames v. HMRC [2015] UKFTT 337 (TC), §89).
Carry back of losses