Finance Bill

House of Commons

Session 2008 - 09
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
383

      (2)
“Relevant claim” means a claim within paragraph 3(2)(a) of Schedule 1AB to
TMA 1970 that—
(a)
is made before 1 April 2012 by a person other than a company, and
(b)
satisfies sub-paragraph (3).
      (3)
A claim satisfies this sub-paragraph if notice requiring the return (or, if more
5
than one, the first return) mentioned in paragraph 3(2)(a) of Schedule 1AB
to TMA 1970 was not given within one year of the end of the tax year to
which the return relates.
Saving for petroleum revenue tax
11
The amendments of TMA 1970 made by this Part of this Schedule do not
10
have effect for the purposes of that Act as applied by paragraph 1 of
Schedule 2 to OTA 1975 (management and collection of petroleum revenue
tax).
Part 2
Corporation tax
15
Claims for recovery of overpaid tax etc
12
Schedule 18 to FA 1998 (company tax returns, assessments and related
matters) is amended as follows.
13
For paragraph 51 (and the heading before that paragraph) substitute—
“Claim for relief for overpaid tax etc
20
51    (1)
This paragraph applies where—
(a)
a person has paid an amount by way of tax but believes
that the tax was not due, or
(b)
a person has been assessed as liable to pay an amount by
way of tax, or there has been a determination or direction
25
to that effect, but the person believes that the tax is not due.
      (2)
The person may make a claim to the Commissioners for Her
Majesty’s Revenue and Customs for repayment or discharge of the
amount.
      (3)
Paragraph 51A makes provision about cases in which the
30
Commissioners for Her Majesty’s Revenue and Customs are not
liable to give effect to a claim under this paragraph.
      (4)
The following make further provision about making and giving
effect to claims under this paragraph—
(a)
paragraphs 51B to 51F and Part 7 of this Schedule, and
35
(b)
Schedule 1A to the Taxes Management Act 1970 (which is
applied by that Part).
      (5)
Paragraph 51G makes provision about the application of this
paragraph and paragraphs 51A to 51F to amounts paid under
contract settlements.
40

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
384

      (6)
The Commissioners for Her Majesty’s Revenue and Customs 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 to the Taxes
Management Act 1970 (following a claim under this
5
paragraph), or
(b)
by or under another provision of the Corporation Tax Acts.
      (7)
For the purposes of this paragraph and paragraphs 51A to 51G, an
amount paid by one person on behalf of another is treated as paid
by the other person.
10
Cases in which Commissioners not liable to give effect to a claim
51A   (1)
The Commissioners for Her Majesty’s Revenue and Customs are
not liable to give effect to a claim under paragraph 51 if or to the
extent that the claim falls within a case described in this paragraph
(see also paragraph 51C(5)).
15
      (2)
Case A is where the amount paid, or liable to be paid, is excessive
by reason of—
(a)
a mistake in a claim, election or a notice,
(b)
a mistake consisting of making or giving, or failing to make
or give, a claim, election or notice,
20
(c)
a mistake in allocating expenditure to a pool for the
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
25
purposes of that Act or a mistake consisting of bringing, or
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 Corporation Tax Acts.
      (4)
Case C is where the claimant—
30
(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—
35
(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
40
amount that is treated as having been determined by a
tribunal (by virtue of section 54 of the Taxes Management
Act 1970 (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
45
following—

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
385

(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
having been so determined),
5
(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.
      (7)
Case F is where the amount in question was paid or is liable to be
10
paid—
(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
15
and Her Majesty’s Revenue and Customs settling such
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
20
corporation tax, and
(b)
liability was calculated in accordance with the practice
generally prevailing at the time.
Making a claim
51B   (1)
A claim under paragraph 51 may not be made more than 4 years
25
after the end of the relevant accounting period.
      (2)
In relation to a claim made in reliance on paragraph 51(1)(a), the
relevant accounting period is—
(a)
where the amount paid, or liable to be paid, is excessive by
reason of a mistake in a company tax return or returns, the
30
accounting period to which the return (or, if more than
one, the first return) relates, and
(b)
otherwise, the accounting period in respect of which the
amount was paid.
      (3)
In relation to a claim made in reliance on paragraph 51(1)(b), the
35
relevant accounting period is the accounting period to which the
assessment, determination or direction relates.
      (4)
A claim under paragraph 51 may not be made by being included
in a company tax return.
The claimant: one person accountable for amounts payable by another
40
51C   (1)
Sub-paragraph (2) applies where a person (“P”) is accountable to
the Commissioners for Her Majesty’s Revenue and Customs
under a relevant enactment for an amount that has been or is to be
set off against a liability of another person (“T”) under a relevant
enactment.
45

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
386

      (2)
A claim under paragraph 51 in respect of the amount may be made
only by T.
      (3)
Sub-paragraph (4) applies where—
(a)
a person (“P”) has paid an amount described in sub-
paragraph (1) in the belief that P was accountable to the
5
Commissioners for the amount under a relevant
enactment, but
(b)
P was not so accountable.
      (4)
A claim under paragraph 51 in respect of the amount may be made
only by P.
10
      (5)
The Commissioners for her Majesty’s Revenue and Customs are
not liable to give effect to a claim under sub-paragraph (4) if or to
the extent that the amount has been repaid to T or set against
amounts payable to the Commissioners by T.
      (6)
“Relevant enactment” means—
15
(a)
Chapter 3 of Part 3 of the Finance Act 2004 or regulations
under that Chapter (construction industry scheme), or
(b)
any other provision of or made under the Taxes Acts.
The claimant: partnerships
51D   (1)
This paragraph applies where—
20
(a)
a trade, profession or business is carried on by two or more
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
25
partnership return.
      (2)
A claim under paragraph 51 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.
30
      (3)
In relation to such a claim, references in paragraphs 51A to 51F to
the 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
35
return was made, or
(b)
the personal representative of such a person.
Assessment of claimant in connection with claim
51E   (1)
This paragraph applies where—
(a)
a claim is made under paragraph 51,
40
(b)
the grounds for giving effect to the claim also provide
grounds for a discovery assessment or discovery
determination on the claimant in respect of any accounting
period, and

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
387

(c)
such an assessment or determination could be made but
for a relevant restriction.
      (2)
The following are relevant restrictions—
(a)
the restrictions in paragraphs 42 to 45, and
(b)
the expiry of a time limit for making a discovery
5
assessment or discovery determination.
      (3)
Where this paragraph applies—
(a)
the relevant restrictions are to be disregarded, and
(b)
the discovery assessment or discovery determination is not
out of time if it is made before the final determination of
10
the claim.
      (4)
A claim is not finally determined until it, or the amount to which
it relates, can no longer be varied (whether on appeal or
otherwise).
Amendment of partnership return etc in connection with claim
15
51F   (1)
This paragraph applies where—
(a)
a claim is made under paragraph 51,
(b)
the claimant is one of two or more persons carrying on a
trade, profession or business in partnership,
(c)
the grounds for giving effect to the claim also provide
20
grounds for amending, under section 30B(1) of the Taxes
Management Act 1970 (discovery of loss of tax from
partnership), a return made by the partnership or any of
the partners in respect of any period, and
(d)
such an amendment could be made but for a relevant
25
restriction.
      (2)
The following are relevant restrictions—
(a)
the conditions in section 30B(4) to (6) of the Taxes
Management Act 1970, and
(b)
the expiry of a time limit for making an assessment under
30
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.
35
      (4)
A claim is not finally determined until it, or the amount to which
it relates, can no longer be varied (whether on appeal or
otherwise).
Contract settlements
51G   (1)
In paragraph 51(1)(a), the reference to an amount paid by a
40
company by way of tax includes an amount paid by a person
under a contract settlement in connection with tax believed to be
due.

Finance Bill
Schedule 52 — Recovery of overpaid tax etc
Part 2 — Corporation tax
388

      (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 paragraph 51 in respect of that
amount—
5
(a)
the references to the claimant in paragraph 51A(5) to (7)
(Cases D, E and F) have effect as if they included the
taxpayer,
(b)
the reference to the claimant in paragraph 51A(8) (Case G)
has effect as if it were a reference to the taxpayer,
10
(c)
the references to the claimant in paragraphs 51E(1)(b) and
51F(1)(b) have effect as if they were references to the
taxpayer, and
(d)
references to tax in Schedule 1A to the Taxes Management
Act 1970 (as it applies to a claim under this Part of this
15
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 discovery determination on the
taxpayer in respect of any chargeable period.
20
      (5)
The Commissioners for Her Majesty’s Revenue and Customs 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 for Her Majesty’s Revenue
25
and Customs and the taxpayer are discharged to the extent of any
set-off under sub-paragraph (5).
      (7)
“Contract settlement” means an agreement made in connection
with any person’s liability to make a payment to the
Commissioners for Her Majesty’s Revenue and Customs under or
30
by virtue of an enactment.”
14
Accordingly, in the heading of Part 6, at the beginning insert “Overpaid
tax,”.
15    (1)
Paragraph 62 (consequential claims etc that may be made) is amended as
follows.
35
      (2)
After sub-paragraph (1) insert—
   “(1A)
This paragraph applies to a claim under paragraph 51 relating to
the accounting period in respect of which the amendment or
assessment is made.”
      (3)
In sub-paragraph (2), for “a claim” substitute “any other claim”.
40
16
In paragraph 88 (conclusiveness of amounts stated in return), insert at the
end—
    “(8)
Nothing in this paragraph affects a power of the company making
the return to make a claim under paragraph 51 (claim for relief for
overpaid tax).”
45

Finance Bill
Schedule 53 — Late payment interest
Part 1 — Special provision: amount carrying late payment interest
389

Consequential amendment
17
In Schedule 1A to TMA 1970 (claims etc not included in returns), in
paragraph 1, in the definition of “partnership claim”, after “Act” insert “or
paragraph 51D of Schedule 18 to the Finance Act 1998 (claims for overpaid
corporation tax)”.
5
Schedule 53
Section 100

Late payment interest
Part 1
Special provision: amount carrying late payment interest
Payments on account and balancing payment
10
1     (1)
This paragraph applies where as regards a tax year—
(a)
payments on account are payable by a person (“P”),
(b)
P makes a claim under section 59A(3) or (4) of TMA 1970 (reduction
of payments on account) in respect of those amounts, and
(c)
a balancing payment becomes payable by P.
15
      (2)
Late payment interest is to be calculated as if each of the payments on
account had been equal to the lesser of the following amounts—
(a)
the aggregate of that payment on account and 50% of the balancing
payment, and
(b)
the amount which would have been payable as a payment on
20
account if the claim under section 59A(3) or (4) had not been made.
      (3)
In determining for the purposes of this paragraph what amount (if any) is
payable by P as a balancing payment—
(a)
it is to be assumed that both of the payments on account have been
paid,
25
(b)
no account is to be taken of any amount which has been paid on
account otherwise than under section 59A(2) of TMA 1970, and
(c)
no account is to be taken of any amount which is payable by way of
capital gains tax.
      (4)
In this paragraph—
30
“balancing payment” means an amount payable—
(a)
in accordance with section 59B(3), (4) or (5) of TMA 1970, or
(b)
in accordance with section 59B(6) of that Act in respect of
income tax assessed under section 29 of that Act;
“payment on account” means an amount payable in accordance with
35
section 59A(2) of TMA 1970.
Payments on account and overpayment
2     (1)
This paragraph applies where as regards any person (“P”) and a tax year—
(a)
payments on account become payable by P, and
(b)
an overpayment becomes repayable to P.
40