2007 Tax Return

2007 Tax Return

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I have a self assessment client who managed to ignore myself and the tax man for 5 years.  Eventually, in March 2011, HMRC launched an enquiry which the client couldn't ignore and she requested that I complete the 2007 - 2011 Accounts and Tax Returns.  

All the outstanding accounts and tax returns were completed and filed in early October 2011.  

There was no income tax due in the tax years 2007/08, 2008/09, 2009/10 or 2010/11.  There was an income tax refund due of £770 for 2006/07, however HMRC are stating that they will not process the tax return and therefore will not process the tax refund either because the deadline for submitting any 2007 tax returns was in March 2011.  Any 2007 tax returns received after this date are not accepted.  This means despite making a loss in 2006/07, the income tax paid on account in respect of that tax year remains on her account as being the tax due for that year.

I appreciate that my client can blame no-one but herself for this tax being unreclaimable now, but it does seem unfair that HMRC can request and accept the accounts as prepared for the purposes of satisfying their investigation but will not process the tax return or repay the overpaid tax.

Had the return showed that tax was outstanding I'm sure that HMRC would be demanding immediate payment.

Has anyone else had experience of trying to file a 2007 tax return recently, and is there any way to get HMRC to process the return and refund the overpaid tax?

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By billgilcom
24th May 2012 12:42

It depends on whether your client wa san SA taxpayer or NOT an SA taxpayer for the year to 5th April 2007.

The 2008 Budget changed how HM Revenue & Customs (HMRC) check whether someone’s tax is correct, and introduced new safeguards for customers. This was done to make the compliance checks more consistent, clear and uniform across a number of taxes. For more information about the new compliance checks please see 'How we check your tax'.

As part of those changes HMRC introduced a standard limit of four years from the end of the tax year for making claims for repayments of tax. A repayment claim is where a taxpayer asks for tax to be refunded, usually because they are entitled to a specific relief from tax which they have not previously claimed.

HMRC also introduced a limit of four years for the department to issue tax assessments (except where a loss of tax has resulted from carelessness or has been done deliberately). A tax assessment is where the department asks a taxpayer to pay tax that has not been included in a return.

The previous limit for claims and assessments for Income Tax and Capital Gains Tax was five years from the 31 January immediately following the tax year. So the time limit for the 2003-04 tax year was 31 January 2010. 

 

So if the client was an SA taxpayer (in that HMRC had requested her to complete a tax return for the year to 5th April 2007 but she had ignored them ) then the 4 year time limit for reclaiming tax refunds took effect and the time limit would have been 5th April 2011.

 

If however she was not an SA taxpayer (in that HMRC had not requested the completion of a tax return for the year to 5th April 2007 ) then the time limit for claiming would have been 5th April 2012 and as the tax return was completed before that in October 2011 then the claim would have been made in time. There is a link that might help you at http://www.hmrc.gov.uk/about/deadlines-taxpayers.htm 

I hope that this helps and if you ever feel that you could usefully discuss such matters just give me a call on 07751720507 

[email protected]

www.wamstaxltd.com

 

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