Finance Bill

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Session 2008 - 09
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Finance Bill

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
376

Schedule 52
Section 99

Recovery of overpaid tax etc
Part 1
Income tax and capital gains tax
Claims for recovery of overpaid tax etc
5
1
In TMA 1970, for sections 33 and 33A substitute—
“33
Recovery of overpaid tax etc
Schedule 1AB contains provision for and in connection with claims
for the recovery of overpaid income tax and capital gains tax.”
2
After Schedule 1AA to that Act insert—
10
“Schedule 1AB
Section 33

Recovery of overpaid tax etc
Claim for relief for overpaid tax etc
1     (1)
This paragraph applies where—
(a)
a person has paid an amount by way of income tax or
15
capital gains tax but the person believes that the tax was
not due, or
(b)
a person has been assessed as liable to pay an amount by
way of income tax or capital gains tax, or there has been a
determination or direction to that effect, but the person
20
believes that the tax is not due.
      (2)
The person may make a claim to the Commissioners for
repayment or discharge of the amount.
      (3)
Paragraph 2 makes provision about cases in which the
Commissioners are not liable to give effect to a claim under this
25
Schedule.
      (4)
Paragraphs 3 to 7 (and sections 42 to 43C and Schedule 1A) make
further provision about making and giving effect to claims under
this Schedule.
      (5)
Paragraph 8 makes provision about the application of this
30
Schedule to amounts paid under contract settlements.
      (6)
The Commissioners are not liable to give relief in respect of a case
described in sub-paragraph (1)(a) or (b) except as provided—
(a)
by this Schedule and Schedule 1A (following a claim under
this paragraph), or
35
(b)
by or under another provision of the Income Tax Acts or an
enactment relating to the taxation of capital gains.
      (7)
For the purposes of this Schedule, an amount paid by one person
on behalf of another is treated as paid by the other person.

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
377

Cases in which Commissioners not liable to give effect to claim
2     (1)
The Commissioners are not liable to give effect to a claim under
this Schedule if or to the extent that the claim falls within a case
described in this paragraph (see also paragraph 4(5)).
      (2)
Case A is where the amount paid, or liable to be paid, is excessive
5
by reason of—
(a)
a mistake in a claim, election or notice,
(b)
a mistake consisting of making or giving, or failing to make
or give, a claim, election or notice,
(c)
a mistake in allocating expenditure to a pool for the
10
purposes of the Capital Allowances Act or a mistake
consisting of making, or failing to make, such an
allocation, or
(d)
a mistake in bringing a disposal value into account for the
purposes of that Act or a mistake consisting of bringing, or
15
failing to bring, such a value into account.
      (3)
Case B is where the claimant is or will be able to seek relief by
taking other steps under the Income Tax Acts or an enactment
relating to the taxation of capital gains.
      (4)
Case C is where the claimant—
20
(a)
could have sought relief by taking such steps within a
period that has now expired, and
(b)
knew, or ought reasonably to have known, before the end
of that period that such relief was available.
      (5)
Case D is where the claim is made on grounds that—
25
(a)
have been put to a court or tribunal in the course of an
appeal by the claimant relating to the amount paid or liable
to be paid, or
(b)
have been put to Her Majesty’s Revenue and Customs in
the course of an appeal by the claimant relating to that
30
amount that is treated as having been determined by a
tribunal (by virtue of section 54 (settling of appeals by
agreement)).
      (6)
Case E is where the claimant knew, or ought reasonably to have
known, of the grounds for the claim before the latest of the
35
following—
(a)
the date on which an appeal by the claimant relating to the
amount paid, or liable to be paid, in the course of which the
ground could have been put forward (a “relevant appeal”)
was determined by a court or tribunal (or is treated as
40
having been so determined),
(b)
the date on which the claimant withdrew a relevant appeal
to a court or tribunal, and
(c)
the end of the period in which the claimant was entitled to
make a relevant appeal to a court or tribunal.
45
      (7)
Case F is where the amount in question was paid or is liable to be
paid—

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
378

(a)
in consequence of proceedings enforcing the payment of
that amount brought against the claimant by Her Majesty’s
Revenue and Customs, or
(b)
in accordance with an agreement between the claimant
and Her Majesty’s Revenue and Customs settling such
5
proceedings.
      (8)
Case G is where—
(a)
the amount paid, or liable to be paid, is excessive by reason
of a mistake in calculating the claimant’s liability to
income tax or capital gains tax (other than a mistake in a
10
PAYE assessment or PAYE calculation), and
(b)
liability was calculated in accordance with the practice
generally prevailing at the time.
      (9)
Case H is where—
(a)
the amount paid, or liable to be paid, is excessive by reason
15
of a mistake in a PAYE assessment or PAYE calculation,
and
(b)
the assessment or calculation was made in accordance
with the practice generally prevailing at the end of the
period of 12 months following the tax year for which the
20
assessment or calculation was made.
     (10)
For the purposes of Cases G and H—
(a)
“PAYE assessment” means an assessment on the claimant
made in accordance with section 709 of ITEPA 2003
(assessment in connection with PAYE deductions), and
25
(b)
“PAYE calculation” means a calculation of the amount of a
deduction or repayment made or to be made under PAYE
regulations in respect of tax estimated to be payable by the
claimant.
Making a claim
30
3     (1)
A claim under this Schedule may not be made more than 4 years
after the end of the relevant tax year.
      (2)
In relation to a claim made in reliance on paragraph 1(1)(a), the
relevant tax year is—
(a)
where the amount paid, or liable to be paid, is excessive by
35
reason of a mistake in a return or returns under section 8,
8A or 12AA of this Act, the tax year to which the return (or,
if more than one, the first return) relates, and
(b)
otherwise, the tax year in respect of which the payment
was made.
40
      (3)
In relation to a claim made in reliance on paragraph 1(1)(b), the
relevant tax year is the tax year to which the assessment,
determination or direction relates.
      (4)
A claim under this Schedule may not be made by being included
in a return under section 8, 8A or 12AA of this Act.
45

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
379

The claimant: one person accountable for amounts payable by another etc
4     (1)
Sub-paragraph (2) applies where, under a relevant enactment, a
person (“P”) is accountable to the Commissioners for—
(a)
an amount representing income tax or capital gains tax
that is or is estimated to be payable by another person
5
(“T”), or
(b)
any other amount that, under a relevant enactment, has
been or is to be set off against a liability of T.
      (2)
A claim under this Schedule in respect of the amount may be made
only by T.
10
      (3)
Sub-paragraph (4) applies where—
(a)
a person (“P”) has paid an amount described in sub-
paragraph (1)(a) or (b) in the belief that P was accountable
to the Commissioners for the amount under a relevant
enactment, but
15
(b)
P was not so accountable.
      (4)
A claim under this Schedule in respect of the amount may be made
only by P.
      (5)
The Commissioners are not liable to give effect to a claim under
sub-paragraph (4) if or to the extent that the amount has been
20
repaid to T or set against amounts payable to the Commissioners
by T.
      (6)
“Relevant enactment” means—
(a)
PAYE regulations,
(b)
Chapter 3 of Part 3 of the Finance Act 2004 or regulations
25
under that Chapter (construction industry scheme), or
(c)
any other provision of or made under the Taxes Acts.
The claimant: partnerships
5     (1)
This paragraph applies where—
(a)
a trade, profession or business is carried on by two or more
30
persons in partnership,
(b)
an amount is paid, or liable to be paid, by one or more of
those persons in accordance with a self-assessment, and
(c)
the amount is excessive by reason of a mistake in a
partnership return.
35
      (2)
A claim under this Schedule in respect of the amount—
(a)
may be made by the relevant partner nominated to make
the claim by all of the relevant partners, and
(b)
may not be made by any other person.
      (3)
In relation to such a claim, references in this Schedule to the
40
claimant are to any of the relevant partners.
      (4)
“Relevant partner” means—
(a)
a person who was a partner in the partnership at any time
during the period in respect of which the partnership
return was made, or
45

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
380

(b)
the personal representative of such a person.
Assessment of claimant in connection with claim
6     (1)
This paragraph applies where—
(a)
a claim is made under this Schedule,
(b)
the grounds for giving effect to the claim also provide
5
grounds for a discovery assessment or determination on
the claimant in respect of any chargeable period, and
(c)
such an assessment or determination could be made but
for a relevant restriction.
      (2)
“Discovery assessment or determination” means—
10
(a)
an assessment under section 29(1), or
(b)
a discovery assessment or discovery determination under
Schedule 18 to the Finance Act 1998 (company tax return
etc).
      (3)
The following are relevant restrictions—
15
(a)
the conditions in section 29(3) to (5),
(b)
the restrictions in paragraphs 42 to 45 of Schedule 18 to the
Finance Act 1998, and
(c)
the expiry of a time limit for making a discovery
assessment or determination.
20
      (4)
Where this paragraph applies—
(a)
the relevant restrictions are to be disregarded, and
(b)
the discovery assessment or determination is not out of
time if it is made before the final determination of the
claim.
25
Amendment of partnership return etc in connection with claim
7     (1)
This paragraph applies where—
(a)
a claim is made under this Schedule,
(b)
the claimant is one of two or more persons carrying on a
trade, profession or business in partnership,
30
(c)
the grounds for giving effect to the claim also provide
grounds for amending, under section 30B(1) (discovery of
loss of tax from partnership), a return made by the
partnership or any of the partners in respect of any period,
and
35
(d)
such an amendment could be made but for a relevant
restriction.
      (2)
The following are relevant restrictions—
(a)
the conditions in section 30B(4) to (6), and
(b)
the expiry of a time limit for making an assessment under
40
that section.
      (3)
Where this paragraph applies—
(a)
the relevant conditions are to be disregarded, and
(b)
the amendment is not out of time if it is made before the
final determination of the claim.
45

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
381

Contract settlements
8     (1)
In paragraph 1(1)(a), the reference to an amount paid by way of
income tax or capital gains tax includes an amount paid under a
contract settlement in connection with income tax or capital gains
tax believed to be due from any person.
5
      (2)
Sub-paragraphs (3) to (6) apply if the person who paid the amount
under the contract settlement (“the payer”) and the person from
whom the tax was due (“the taxpayer”) are not the same person.
      (3)
In relation to a claim under this Schedule in respect of that
amount—
10
(a)
the references to the claimant in paragraph 2(5) to (7)
(Cases D, E and F) have effect as if they included the
taxpayer,
(b)
the references to the claimant in paragraph 2(8)) and (10)
(Cases G and H) have effect as if they were references to
15
the taxpayer,
(c)
the references to the claimant in paragraphs 6(1)(b) and
7(1)(b) have effect as if they were references to the
taxpayer, and
(d)
references to tax in Schedule 1A (as it applies to a claim
20
under this Schedule) include such an amount.
      (4)
Sub-paragraph (5) applies where the grounds for giving effect to a
claim by the payer in respect of the amount also provide grounds
for a discovery assessment or determination on the taxpayer in
respect of any chargeable period.
25
      (5)
The Commissioners may set any amount repayable to the payer by
virtue of the claim against any amount payable by the taxpayer by
virtue of the assessment or determination.
      (6)
The obligations of the Commissioners and the taxpayer are
discharged to the extent of any set-off under sub-paragraph (5).
30
      (7)
In this paragraph—
“contract settlement” means an agreement made in
connection with any person’s liability to make a payment
to the Commissioners under or by virtue of an enactment;
“discovery assessment or determination” has the same
35
meaning as in paragraph 6.
Interpretation
9     (1)
In this Schedule “the Commissioners” means the Commissioners
for Her Majesty’s Revenue and Customs.
      (2)
For the purposes of this Schedule, a claim is not finally determined
40
until it, or the amount to which it relates, can no longer be varied
(whether on appeal or otherwise).”
Consequential amendments
3
TMA 1970 is amended as follows.

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 1 — Income tax and capital gains tax
382

4
For the heading before section 32 substitute “Overpaid tax, excessive
assessments etc”.
5     (1)
Section 43A (further assessments etc) is amended as follows.
      (2)
After subsection (2A) insert—
“(2B)
For the purposes of this section and section 43B below, a claim under
5
Schedule 1AB is relevant in relation to an assessment for a year of
assessment if it relates to that year of assessment.”
      (3)
In subsection (3), for “a claim” substitute “any other claim”.
6     (1)
In paragraph 1 of Schedule 1A (claims etc not included in returns), in the
definition of “partnership claim”, after “46(2)(b) of” insert “, or paragraph 5
10
of Schedule 1AB to,”.
7     (1)
Paragraph 4 of that Schedule (giving effect to claims and amendments) is
amended as follows.
      (2)
In sub-paragraph (1)—
(a)
for “and (4)” substitute “to (5)”, and
15
(b)
omit “and to any other provision in the Taxes Acts which otherwise
provides”.
      (3)
In sub-paragraph (2), for “and (4)” substitute “to (5)”.
      (4)
Insert at the end—
    “(5)
This paragraph has effect subject to any provision in the Taxes
20
Acts that—
(a)
requires or allows effect to be given to a claim by other
means, or
(b)
provides that an amount is not to be discharged or repaid.”
8
In Schedule 3ZA (date by which payment to be made after amendment or
25
correction of self-assessment), omit paragraph 10 (amendment following
claim for error or mistake relief).
9     (1)
Section 70H of CAA 2001 (lessee: requirement for tax return treating lease as
long funding lease) is amended as follows.
      (2)
In subsection (2), for “for relief under the error or mistake provisions in
30
respect of” substitute “under the recovery provisions for relief in respect of
an amount paid or liable to be paid that is excessive by reason of”.
      (3)
In subsection (3)—
(a)
for ““the error or mistake provisions”” substitute ““the recovery
provisions””, and
35
(b)
for “section 33 of” substitute “Schedule 1AB to”.
Transitional provision
10    (1)
In relation to a relevant claim, paragraph 3(1) of Schedule 1AB to TMA 1970
(inserted by this Part of this Schedule) has effect as if for “more than 4 years
after” there were substituted “more than 5 years after the 31st January next
40
following”.