Repeal of s426 (6) (a) ITA 2007

Repeal of s426 (6) (a) ITA 2007

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I have asked HM Treasury to consider amending the carry back of Gift Aid rules and in particular repealing s426 (6) (a) ITA 2007 . My understanding of current practice is as follows:

The carry back of donations made under Gift Aid to the previous tax year is an opportunity for taxpayers to arrange their affairs so as enjoy higher rate tax relief and age related personal allowances especially in years where their income and/or personal circumstances change. The deadline for making the claim is the date on which the current year tax return is filed but no later than 31 January following the year end. No amendment to the Return is permitted to allow current year Gift Aid payments to be carried back once the return is filed.

The deadline is therefore variable which makes it difficult to publicise or remember and would appear to disadvantage those who submit their tax returns early. Both of these factors should encourage tax advisers to delay submission of client tax returns until as late as possible or risk a negligence claim. If agents delayed submission of all returns until January this woud have a severe impact on HMRC's management of the self assessment process and the collection of tax due.

If s426 (6) (a) ITA 2007 is repealed then the deadline becomes 31 January following the year end. Tax Returns filed before this date can be amended to allow the Gift Aid payments in the year to be carried back. The disadvantages of the current legislation referred to in the paragraph above disappear and all parties benefit.

Is my understanding correct and if so, do accountingweb readers have any refinements to the above?

doug

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