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HMRC internal manual

Self Assessment Claims Manual

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HM Revenue & Customs
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Making Enquiries Into Claims: When Do Claims Become Final?

Prior to Self-Assessment (SA) officers were obliged to give a decision about the validity and admissibility of the claim on receipt and, as a result, claims achieved finality.

The SA legislation does not explicitly include the concept of claims becoming “final”. It does not say that an officer has to give a decision about a claim nor does it include the concept of an officer accepting a claim. Instead, the legislation allows certain actions to be taken within set time limits.

Once a claim has been made it can only be changed by:

  • The customer amending it within the amendment window.
  • An officer amending it to correct an obvious error or amending it at the conclusion of an enquiry into the claim. The latter may involve an amendment, an assessment or a settlement by contract.
  • A discovery assessment that is raised after the enquiry window has closed. This is a separate assessment to recover the tax and does not change the claim itself.
  • A supplementary claim made under section 42(9) TMA 1970. These supplementary claims are made to correct an error or mistake and must be made within the time limit allowed for making the original claim. Similar to the discovery assessment, they do not change the original claim and are treated as a second claim.

So, a claim will normally become final when it is no longer possible to amend it or enquire into it, that is unless there is

  • a later discovery or
  • an error with the original claim is established.

For SA customers who are required to file the return by the normal filing date, that will mean the claim will typically become final on the first anniversary of 31 January following the end of the year of assessment (22 months).

However, the vast majority of customers paying tax via PAYE do not get SA tax returns. Despite this they too will get finality at the 22-month point for in-year claims. But, as the law stands

  • other claims carried forward automatically, or
  • put in into the code number before the start of the tax year on the basis of preliminary information given by the taxpayer

do not become final at that point. HMRC is entitled to enquire into such claims at any time up to 5 years 10 months after the end of the tax year. This time limit will change on 1 April 2012. From that date HMRC will only be able to enquire into such claims up to 4 years after the end of the year of assessment.

This position will continue to apply where

  • a code number for one tax year is simply applied for the next year and
  • the taxpayer has provided no information for the later year and
  • it is later discovered that relief is not due or
  • the amounts given were excessive.

This will also be the position if HMRC discover that any preliminary information given by the taxpayer was incomplete or misleading.

But, outside of cases of specific discovery, once 22 months after the tax year have elapsed, HMRC will not, as a matter of routine, issue tax returns or other forms simply to check claims details in code numbers for the tax year.

Individual cases will only be looked at where information comes to hand that suggests there has been incomplete disclosure or fraudulent or negligent conduct.

This assurance is intended to give taxpayers who do not normally get tax returns the same finality arrangements as those who do get returns.