Repayment of tax beyond 4 years is possible

Overpaid tax refunds, must you claim within the four-year deadline?

If you overpay tax, you can claim it back from HMRC within a statutory period, which used to be six years, but since 2012 reduced to four. For example tax overpaid in the financial year 2013/2014, say, would need to be claimed back by April 2018; but can you still claim back overpaid tax beyond the four-year deadline?

A recent Upper Tribunal case appears to suggest you can, if there is reasonable excuse for not having made the claim within the deadline. Dr Vasiliki Aftopoulou v HMRC concerns a case where the first-tier Tribunal’s decision was overturned by the upper Tribunal, which held the decision was incorrect as the first-tier Tribunal did have jurisdiction to admit a late claim where there is a reasonable excuse, but had failed to do so.

Detail of the case

Dr. A. had sought to claim a refund of overpaid tax outside the deadline claiming she had been abroad and misunderstood some of the procedural aspects of returns and appeals. HMRC applied to have the appeal struck out (which apparently it does routinely) on the basis that it was made outside the four-year deadline. The first-tier Tribunal complied with HMRC, noting that the claim had been made outside the statutory four-year deadline.

Ruling by the Upper Tribunal

Dr. A. argued that the first-tier Tribunal would have had jurisdiction in respect of her appeal had it taken into account that she was able to show that she reasonable excuse for not claiming within the four-year deadline. The upper Tribunal agreed with Dr. A. and concluded that the first-tier Tribunal was legally obliged to consider whether the taxpayer had a reasonable excuse for the late submission of her claim.

Conclusions

The case demonstrates that it is possible to make and win a claim for overpaid tax beyond the four-year deadline. It also shows that HMRC cannot apply for late appeals to be struck out where there is reasonable excuse.

Going the late-appeal route is not recommended: claims made late, even by a few days, are scrutinized by HMRC’s Appeal and Litigation Team, which then makes a decision on whether to apply to the court to have the appeal struck out or to accept the appeal. It is hoped that HMRC will be more careful to consider the evidence of "reasonable excuse" in following cases.

So what if the overpayment of tax was due to an oversight by HMRC? In this case, it is as well to know the rule (b 14) that, "repayments of tax will be made in respect of claims made outside the statutory limit where an overpayment of tax has arisen because of an error by HMRC or another Government department and where there is no dispute or doubt as to the facts".?

Please contact your account manager about overpayment of tax, or any other matters. We will always implement a strategy to bring about a successful outcome, but tax overpayments we would most certainly have our eye on, and would make an immediate claim.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.