What the person can claim: Overview
A person may claim overpayment relief for
- an amount which has been assessed but is not due,
- an amount which was paid but was not due, or
- an amount paid under a contract settlement which is more than the tax due.
A person may make a choice between alternatives allowable under the Taxes Acts which, with hindsight, leads them to pay more tax than they would have done had they made a different choice. This does not mean that the tax was not due.
Simon is a sole trader who runs his business from an office in his home. Under the simplified expenses rules (BIM75010) he used a flat rate deduction of £26 per month to cover the use of his home for business purposes in his 2013/14 return. After the deadline for amending his return passed, Simon realised that if he had worked out the business proportion of his actual household running costs and used these figures instead, he would have paid less tax.
Simon cannot claim overpayment relief. The fact that he could have paid less tax if he had made a different choice does not mean the tax he paid was not due.
Excessive assessments, determinations or directions
A person can claim overpayment relief if they realise that an assessment, for example, is excessive, as long as none of the exclusions at SACM12065+ apply.
Adriana receives £13,450 interest on an offshore bank account in the tax year 2009-10. In 2013 she realises that she accidentally recorded £15,450 interest in her 2010 self-assessment return. As a result, she has overpaid income tax. It is too late for Adriana to amend her self-assessment return. As she has no other means of recovering the overpaid income tax, she can make a claim for overpayment relief. She must make her claim before 6 April 2014.
A person can claim overpayment relief where they have overpaid tax but there is no assessment. However, there will normally be other means of recovering such overpayments of tax. As the person must use those other means instead of claiming overpayment relief - see SACM12080 - such cases will be rare.
Excessive contract settlement
A person may claim overpayment relief if the tax liabilities covered by a contract settlement are excessive, see SACM12060.
Para 1 Schedule 1AB TMA 1970
Para 51 Schedule 18 FA 1998, as amended