Out of time tax returns – could you have a second chance?

A Tribunal decision cast doubt on HMRC’s refusal to process tax returns which are sent in more than four years after the end of the relevant tax year.

The Taxpayer’s case

The case concerned a taxpayer (Mr Higgs) who had made large payments on account for the tax year 2006/07. For various reasons he did not file his tax return for 2006-7 until November 2011. The return showed a tax liability that was much lower than the payments on account, so the taxpayer was due a substantial refund.

HMRC refused to process the return, and make the repayment of tax, on the grounds that the taxpayer had only four years from the end of the tax year 2006/07  in which to submit a return. The return should therefore have been submitted by 5 April 2011 at the latest.

What the Tribunal decided

The Tribunal decided that the four year rule did not apply in the taxpayer’s case and ordered HMRC to process the return.

Full details of the case can be downloaded from the HM Courts and Tribunals Service website at: http://www.tribunals.gov.uk/financeandtax/Documents/decisions/Higgs-v-HMRC.pdf

 What might HMRC do next?

All cases will need to be considered on their own merits, and HMRC has not yet made a policy statement on the impact of Mr Higgs case on other taxpayers. But it is understood by TaxAid that HMRC may decide to apply the Higgs decision only to late returns submitted on or after the date of the hearing (11 March 2015).

HMRC may make an appeal against the Upper Tribunal decision, or it may ask Parliament to change the law.

How the decision might apply to other taxpayers

Here are some general guidelines on how the case could impact you:

Note: Mr Higgs’ case concerned overpayment of tax due to payment on account, but it may also apply to tax deducted at source – eg through CIS or PAYE.

What you should do

Consider writing to HMRC as soon as possible, asking for the return to be processed.

If your income is within TaxAid’s remit (less than £20,000 per annum) please contact TaxAid’s helpline for further advice.

This entry was posted on Tuesday, May 5th, 2015 at 12:24 pm and is filed under Tax News. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.