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HMRC internal manual

Self Assessment Claims Manual

Claims involving two or more years: how is the claim quantified

Paragraph 2(4) Schedule 1B sets out how the claim is to be quantified. It reads

(4) Subject to sub-paragraph (5) below, the claim shall be for an amount equal to the difference between-

(a) the amount in which the person is chargeable to tax for the earlier year (“amount A”); and

(b) the amount in which he would be so chargeable on the assumption that effect could be, and were, given to the claim in relation to that year (“amount B”).

The claim is quantified in terms of the tax difference in “the earlier year”. The “tax difference” is the tax that would not have been due in “the earlier year” if the claim could be and had been given effect to in that “earlier year”.

Although the claim is quantified by reference to the earlier year, it remains a claim for the later year as that is the year in which the event giving rise to the claim occurred. For example, the year in which the loss arose or the pension contribution was paid.