Consequential Claims after Assessment and Amendment: Background and Legislation
TMA70/S43A & B
This part of the manual deals with claims and elections that may be made when
- an assessment is made by HMRC or
- a self-assessment is amended by HMRC (for example, on the conclusion of an enquiry) or
- an enquiry is concluded by a contract settlement.
Time limits for making claims are not extended simply because an enquiry is open.
The legislation does however allow a taxpayer to make various out-of-time actions where we make a discovery assessment or amend a return in an ITSA enquiry closure notice. You should follow the same rules in contract settlements.
Section 43C TMA, the section dealing with out-of-time actions following an amendment to a return by an SA enquiry closure notice, was introduced by Finance Act 2003.
Different provisions apply depending on whether or not the additional liability arises as a result of fraudulent or negligent conduct. If the additional liability is not a result of fraudulent or negligent conduct, the provisions are wider. They extend to elections as well as claims and to the revocation or variation of claims or elections, unless expressed to be irrevocable.
If you settle an enquiry or investigation by contract you should allow in your final figures the equivalent of any relief or allowance the taxpayer would be entitled to under section 43C if their return had been amended.
Whether culpable or non-culpable additions are involved, section 43(2) (as applied by section 43C for closure notices) allows a taxpayer to make a claim that could not have been allowed but for the making of the assessment or amendment. The claim can be made up to the end of the year of assessment following the one in which the assessment was made or closure notice issued. In addition other legislation can apply depending on whether the additions are culpable or non- culpable.
See SACM9010 for culpable additions and SACM9015 for non-culpable additions