time limit for claims

[ptpash]

Section 42(2) TMA 970 provides that any claim must be lodged in the tax return if a notice under section 8 has been served (ie a tax return issued).

If this is the case, does this mean that section 43 (time limit for making claims, typically 4 years) only can apply to claims which cannot be made in the tax return?

[Incredulum]

I think I understand your question, but maybe I don't.

A 4 year limit can apply to anything which allows the submission of an amended return. For instance an error or mistake claim can be made within 4 years which allows the resubmission within 4 years of a return including such a claim.

So I think the answer to your question is "no" but perhaps I misunderstand either the question or the answer!

[ptpash]

What I'm trying to ask is that where a claim must be made in the tax return then how can a 4 year time limit for lodgement of the claim apply?

Assume a particular claim is required to be lodged in the tax return for the tax year 2010/11 (per s42(2)).

If the claim is not lodged in the return (as required by s42(2)) then it must fail and thus cannot then be lodged at a later date.

[maths]

I'm wondering if you are getting confused (don't worry most of us are).

S43 basically provides for a time limit to apply to a claim to be lodged; in essence within 4 years of the relevant tax year.

S42 deals with how the claim is to be made; the section has no relevance to any time limits. The section provides that where a claim must be made in a tax return it must be so made (ie in any tax return so long as the 4 year limit of s43 is met) if HMRC have issued such a return for completion. Not all claims can be made in the tax return but may need to be made elsewhere (eg sometimes on a form in an HMRC "Help Sheet").

[Incredulum]

Not all claims can be made in the tax return but may need to be made elsewhere (eg sometimes on a form in an HMRC "Help Sheet").

You intrigue me, Maths. Though maybe this is because I come from a corporate tax approach. There is no claim of which I can think that I would not put into a corporation tax computation, probably as a footnote on the relevant page. What do you have in mind?


And from a practical point, OP, similarly even if the tax return itself were out of time for normal amendment, presumably making a claim would affect the relevant tax return so it would be natural to submit a revised tax return reflecting the updated status.

Now, I agree, the strict statutory procedure for an error or mistake claim would be something along the lines of (I haven't checked this back to the legislation recently) (1) write to HMRC notifying them of error and making the claim, and then (2) for them to (ask you to) adjust your return. And my proposal merely shortcuts this process - to the benefit I think of both HMRC and the taxpayer.

[maths]

Incredulum

If for example an individual wished to claim relief under TCGA 1992 s 165 (gifts of business asset) then HelpSheet 295 states:

"It also includes a form which you must use for the purposes of claiming the principal relief which this helpsheet deals with.

Thus, this is an example where a claim cannot be included in the normal tax return (ie s42(1) is in point and s 42(2) inapplicable).

Another example is under the new "overpayment relief" (formerly but no longer "error or mistake" claims) where no such claim for relief can be made in a tax return but must be made in writing (TMA 1970 Sch 1AB para 3 (4)).

I stand to be corrected by others with more experience re claims lodgement.

[mullet]

And from a practical point, OP, similarly even if the tax return itself were out of time for normal amendment, presumably making a claim would affect the relevant tax return so it would be natural to submit a revised tax return reflecting the updated status.

The theory is sound, but the practice a little different. If the return is out of time for amendment, then HMRC will process it as a standalone claim. They will calculate the tax difference and put a credit on the statement. The effective date for interest purposes (i.e. the date on which it counts as "payment made") is the date of the claim - not the relevant 31 January. But the submission of an amended return is a sensible way of showing the revised tax position (even if that return won't be "processed" as such).

and then (2) for them to (ask you to) adjust your return.

If within the time limit for amendment, then yes. If no, then as above and it will be a standalone claim (but must satisfy the conditions for overpayment relief - whereas a return can be amended within the time limit for any reason).

[maths]

mullet

Do you have any comment on my first posting which sought to address the OP's query?

[mullet]

Maths, I agree with your first response. Section 42(2) states "Subject to subsections (3) and (3A) 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."

In my opinion, this subsection is mainly for HMRC's benefit. In short, if you can include your claim in a return either by delaying/bringing forward the claim or the return (within time limits), then do so. It is far easier for HMRC to deal with everything within one document. Standalone claims are burdensome for HMRC.

Section 43 simply sets the default time limit, recognising that another part of the legislation might set a longer or shorter time limit.

Returning to the original post:

If this is the case, does this mean that section 43 (time limit for making claims, typically 4 years) only can apply to claims which cannot be made in the tax return?

The answer is "no".

[maths]

Thank you mullet.

Trust, ptpash's query now resolved satisfactorily.