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HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
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Repayments: claims made outside a return: examples of giving effect to carry back relief

1) Pension payments and claim to carry back made before 31 July in later year

The facts of the case are as follows  


* 1997-98 POA (1) due 31/01/98 £5000 (paid 31/1/98)
* 1997-98 POA (2) due 31/07/98 £5000
* 1997-98 return filed on 30/04/98. The return contains a claim to carry back relief for pension contributions paid 20/04/98

Example 1a  
  
The 1997-98 return shows a liability for the year of £15000. The second POA will be due on 31/07/98 and a balancing charge of £5000 will be due on 31/01/99  
  
The relief for pension carry back (4000 @ 40% = £1600) will be set off against the balancing charge. The POAs for 1998-99 will be £7500 each.  
  
(Care should be taken when using function CREATE FREESTANDING CREDIT in these circumstances because the credit will automatically be allocated to the second POA rather than the balancing charge. The taxpayer still needs to pay the second POA in full by the due date of 31/07/98)  
  
Example 1b  
  
The 1997-98 return shows a liability of £9500. The POAs for 1997-98 are adjusted to £4750 each and there is no balancing payment due for the year  
  
The relief due (4000 @ 40% = £1600) will be set off against the second POA due on 31/07/98. The POAs for 1998-99 will be £4750 each  
  
Example 1c  
  
The 1997-98 return shows a liability of £5500. The POAs are adjusted to £2750 each and there will be no balancing payment due  
  
The relief due is 4000 @ 23% = £920. £500 is set against the balance of the POA for 31/07/98 and the remainder (£420) is repaid. No repayment supplement is due. The POAs for 1998-99 will be £2750 each  

2) Pension payment and claim to carry back is made before 31 January in later year

The facts of the case are as follows  


* 1997-98 POA (1) due 31/1/98 £5000 (paid 31/01/98)
* 1997-98 POA (2) due 31/7/98 £5000 (paid 31/07/98)
* 1997-98 return filed 30/08/98. On 30/10/98 the taxpayer makes a pension payment of £4000 and a stand alone claim to carry back

Example 2a  
  
The 1997-98 return shows a liability for the year of £15000. A balancing charge of £5000 will be due on 31/01/99  
  
The relief for pension carry back (4000 @ 40% = £1600) will be available to set off against the balancing charge. The POAs for 1998-99 will be £7500 each  
  
Example 2b  
  
The 1997-98 return shows a liability of £9500. The POAs for 1997-98 are adjusted to £4750 each and there is no balancing payment due for the year  
  
The relief due (4000 @ 40% = £1600) can be repaid. No repayment supplement is due. The POAs for 1998-99 will be £4750 each  
  
Example 2c  
  
The 1997-98 return shows a liability of £5500. The POAs are adjusted to £2750 each and there will be no balancing payment due  
  
The relief due (4000 @ 23% = £920) can be repaid. No repayment supplement is due. The POAs for 1998-99 will be £2750 each  

3) Claim to carry back is made after filing date for earlier year

The facts of the case are as follows  


* 1997-98 POA (1) due 31/01/98 £5000 (paid 31/01/98)
* 1997-98 POA (2) due 31/07/98 £5000 (paid 31/07/98)
* 1997-98 return filed 03/01/99 (liability £15000). Balancing payment due (and paid) 31/01/99 £5000. POAs 1998-99 £7500 each (first POA paid 31/01/99)
* On 15/03/99 the taxpayer makes a pension payment of £4000

Example 3a  
  
The taxpayer makes a carry back claim on 15/03/99. The liability for the earlier year is settled, there is no outstanding SA liability and none becoming due within 45 days  
  
The relief for pension carry back (4000 @ 40% = £1600) will be given by repayment. No repayment supplement is due  
  
Example 3b  
  
The taxpayer makes a carry back claim on 08/07/99. The liability for the earlier year is settled, there is no outstanding SA liability but the second POA for 1998-99 will become due within 45 days  
  
The relief for pension carry back (4000 @ 40% = £1600) will be given by set off against the POA  
  
Example 3c  
  
The taxpayer makes a carry back claim on 10/08/99. The second POA for 1998-99, due on 31/07/99, has not been paid  
The relief for pension carry back (4000 @ 40% = £1600) will be given by set off against the POA with an effective date of payment of 10/08/99.