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HMRC internal manual

Guidance on Real Estate Investment Trusts

Distributions: administration: quarterly returns: mistakes

If the company becomes aware that they have omitted something from the return, includedsomething in error or made some other mistake in completing the return, they have todeliver an amended return correcting the mistake(s) (regulation 11 SI 2006/2867). Theamended return should be sent in as soon as the company becomes aware of the mistake.

The company must also make any adjustments to payments, repayments, setoffs etc as arenecessary to reflect what the position would have been if a correct return had beendelivered in the first place.

For example, company C (the principal company of a Group REIT) believed shareholder A wasa company that was UK resident for tax purposes, and paid a PID of 100 gross to A on 5January 2008. However A ceased to be UK-resident on 31 December 2007 so was not entitledto gross payment: C became aware of this in May 2008. The return for quarter ending 31March 2008 showing that 100 paid gross was therefore incorrect. C sends in an amendedreturn for QE 31 March 2008 on 7 June 2008, showing 78 payable to A and 22 tax due,accompanied by 22 tax. It is up to C to decide whether or how to seek reimbursement of the22 paid in error to A.

Where the company has paid a shareholder net when they were entitled to gross payment, theconsequences depend on what the company could have reasonably believed about theshareholder. For information on the meaning of ‘reasonable belief’ seeGREIT08125. If the company might reasonably have known that gross payment was due (forexample, a charity has sent in details of its Charity Registration number but theinformation has not been acted on) then the company should make an amended return and payover the tax deducted in error to the shareholder. How the company recovers the tax fromHMRC depends on how the tax was accounted for in the original return.

If however the company had no reason to believe gross payment was appropriate, it is up tothe shareholder to claim the tax back as part of their SA return or as a repayment claimin the normal way. If the shareholder is entitled to gross payment it is for thatshareholder, or an intermediary acting on their behalf, to provide the company withassurances that can form the basis of reasonable belief.