Recovery of payments on account

A case last year (UKUT 0092: The Queen (on the application of Andrew Michael Higgs) and HMRC March 2015 Upper Tribunal) concerned an application for judicial review of an HMRC decision to deny a repayment. The taxpayer made payments on account for 2006/07 of £46,317 but the actual tax liability was £18,830.

Such overpayments are repayable automatically under s59B(1) TMA 1970 unless there is an enquiry. However, HMRC argued that the tax return, (and more particularly the self-assessment contained in it) being filed on 2 November 2011, was received too late to be valid, as the deadline was 5 April 2011, when the four year limitation period under s34(1) TMA 1970 expired. The taxpayer argued that this time limit only applies to assessments made by HMRC and so does not apply to a self-assessment.

The Tribunal stated that:

'...I have reached the conclusion that the Claimant's interpretation of s34(1) is to be preferred, and therefore that the time limit in that subsection has no application to a self-assessment such as that which the Claimant made in this case. That interpretation is consistent with the natural reading of the section as a whole, including s34(2) which admittedly has no application to self-assessments. It is also consistent with the placing of this section alongside other sections such as s36 which relate exclusively to assessments by HMRC. Further, the interpretation espoused by HMRC would result in inconsistency with other provisions of the TMA, including those which contain different time limits such as s8 and s28C.

Both parties indicated that if I held that the time limit in s.34(1) was not applicable, then I should order HMRC to process the Claimant's tax return including the self-assessment in respect of the year 2006/7. Therefore, in the light of my conclusion on the s34 issue, I so order.'

Change in the law

Due to the above case, a new specific time limit is to be introduced which requires a self-assessment contained in a return under ss8 or 8A TMA 1970 to be made within four years of the end of the year of assessment to which it relates.

This change applies to self-assessments for a year earlier than 2012/13 as if the above four year time limit was 5 April 2017.

It may be you have some clients who have been denied repayments by HMRC in the past. There is now an opportunity to send in those old returns again but as soon as possible before HMRC restrict those old years.