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HMRC internal manual

Employment Income Manual

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HM Revenue & Customs
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Deductions from earnings: capital allowances: procedures: time limits: claims and appeals

Section 205(4) ICTA 1988 and Section 3(1) and (2) CAA 2001

Claims

Strictly speaking, capital allowances must be claimed in a self-assessment return (Section 3(1) and (2) CAA 2001). In practice, however, many employees and office holders do not receive a return. You can therefore accept a capital allowance claim by an employee or office holder that is made:

  • in correspondence
  • by the completion of a form P87
  • in a self-assessment return.

If an assessment or self-assessment has become final, capital allowances should not be given for the year in question unless there are grounds for allowing a late claim - see SACM 10035 onwards.

Time limits

As explained above, the strict legal position is that capital allowances must be claimed in a self- assessment return. The time limits for making or amending a claim to capital allowances are therefore the same as the time limits for making or amending a self-assessment.

Note that the SA time limits do not begin to run until a return is issued. Employees who have not received a return can request one up to 3 years after 31 October following the year concerned (Section 711(2) ITEPA 2003). For example, a return for 2009/10 can be requested at any time up to 31 October 2013.

Claims which are made in correspondence, or in a form P87, may therefore be accepted if they are received at a time when the employee is still within the time limit for requesting a SA return.

Appeals

Note that the claims procedure in Section 42 TMA 1970 does not apply to claims for capital allowances. This means that if a claim to capital allowances cannot be settled by agreement the only way to bring the dispute before the Commissioners is:

  • for 1995/96 and earlier, an appeal against a Schedule E assessment
  • for 1996/97 onwards, an appeal against an HMRC amendment to a self- assessment (if the dispute involves a taxpayer who is not normally within SA, they will nevertheless have to complete a self-assessment for the year concerned).