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Time limits for income tax determination

Time limits for income tax determination

Our client's income tax return for the year to 5th April 2008 was filed late by paper on 28th May 2012. This client appointed us in December 2011 and only gave us the records on 26th April 2012 for us to prepare the 2007/08 accounts and tax. To my knowledge there are no extenuating circumstances for the client to be late in getting the accounts ready .

HMRC issued a determination of tax in May 2009 and determined the tax liability at £120,100. The 2008 tax return prepared showed the actual liability to be £78,569, so the tax was overcharged by £41,531.

HMRC's guidance & Section S28C(5) and (6) state that a determination can only be replaced by an actual self assessment made within three years from the filing date for the 2007/08 tax return,. The deadline therefore seems to be 31st January 2012 for replacing the £120,100 determination. As the 2008 return was actually filed on 28th May 2012, it seems that we were out of time and HMRC will NOT process the 2008 return submitted and replace the tax determination with the actual figures of £78,569. This means that our client will be £41,531 worse off by not attending to his tax return within the 3 year period.

Does anyone have any experience of this ? Is there any other way or any other tax provisions to allow us to extend the three year deadline or to allow us to have the 2008 tax determination replaced with actual tax return figures ?

Any comment would be appreciated.

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28th Jun 2012 17:08

Special Relief

You need to refer to Revenue Manuals at SACM 12220 and SACM 12230.  These give provisions for refunding tax where a determination has been proven to be excessive following submission of a Self Assessment Return outside of the Statutory window.

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