Tax Bite – How far back can tax repayments go?

The issue

Apparently HMRC can no longer reject income tax rebate claims as ‘out of time’. There may therefore be opportunities to recover ‘irrecoverable’ income tax.

Background Facts

In April 2015 The Upper Tax Tribunal ruled that HM Revenue and Customs has no general right to refuse a taxpayer’s claim for a refund of overpaid tax going back more than four years.

In March 2008 the Taxpayer’s accountant prepared his self-assessment return for the 2006/07 tax year and sent it to him for his signature. He reviewed this, ticked the box for a refund for the overpaid tax (amounting to £27,000), and then forgot all about it.

The Taxpayer did not realise he had failed to submit the form until November 2009, and then did not actually file it until November 2011.

HMRC refused to process the form or give him a tax refund as they stated that s34(1) of the Taxes Management Act 1970 (TMA) sets a time limit on refund claims, with the effect that no assessment to tax may be made later than four years after the end of the tax year concerned. HMRC contended that this included self-assessment.

The Taxpayer argued that s34 TMA applied only to HMRC’s assessments and even if it did apply, HMRC had discretion to extend the deadline and should be made to do so under the European Convention on Human Rights.

The tribunal agreed that taxpayers have the right to file a self-assessment return many years after the end of the tax year concerned, and are automatically entitled to a refund of any overpaid tax.

(Higgs v Revenue & Customs, 2015 UKUT 92 TCC).

Action Required

Now is the time for clients to revisit any tax refunds which have previously been refused by HMRC. There may now be scope to recover this on the back of the above decision.




Sign up for our newsletter

Interested in receiving the latest tax planning ideas?

Sign up to Tax Bites – our weekly update offering practical but effective tax saving tips.

Contact Us

You can use this form to request us to give you a call or if you prefer just leave us a message. Please be sure to leave us a contact number or email address for you and we will get back to you as soon as we can.

0161 927 9277


Fairbank House
Ashley Road
WA14 2DP