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Form of claim for tax relief for a Trust

HMRC say I need an SA900, are they right?

I have a claim to make for a client under TCGA92/S225 for PPR relief on a trust which removes any liability on the sale of the only asset in the trust, which is then disolved.

HMRC insist that we  register the trust under the new register (which would otherwise have no 'tax consequence' and be exempt) and file an SA900.

Are they right? A letter with the SA905 comps would save several hours of messing about my end. 

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06th Nov 2017 14:31

Claim? It isn't a claim. It is a relief that applies automatically to turn something that would otherwise be a chargeable gain into a gain that is not a chargeable gain.

Your choices are:
1) do nothing and the 4 year discovery time limit applies.
2) Go along with HMRC, file the tax return, giving adequate disclosure of the transaction at issue. Then they only have one year from when the return is filed to consider taking issue.

Still, if it's a lot of messing about for you, you could just go with option 1 and leave your (fee-paying?) client exposed for that much longer.

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06th Nov 2017 14:48

@PNL thanks for your input.

So if we do nothing, and there is a discovery, the relief would automatically apply at that time? Or is there a "gotcha" moment when HMR can enquire, but we are out of time to use the relief?

The client is a huge time drain and I could do without it in the 31st Jan run in, if i say it will save them in fees they will bite my hand off and keep it open.

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to ireallyshouldknowthisbut
06th Nov 2017 15:08

No. The relief either applies or it doesn't. You believe it does. HMRC may identify some foible that means it doesn't. All that happens is HMRC have longer to identify the foible.

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to Portia Nina Levin
06th Nov 2017 16:39

Whilst "sections 222 to 224 shall also apply" (ie, no claim), "section 223 (as so applied) shall apply only on the making of a claim by the trustees".

Which seems to suggest that, although the application of the relief is automatic (think about it - you don't get an allowable loss on your OMR), the quantification of the relief is not.

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to Tax Dragon
06th Nov 2017 16:56

Oops! Agreed (ish)

I think that s 223 is the relief though. As such it seems to me to apply to losses as it does to gains (s 16).

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to Portia Nina Levin
06th Nov 2017 17:25

Yes s16 wipes out a loss for a (direct) s222 case. But the amendment to s225 that brought in the need for a claim has I think had the (unintended?) consequence that trustees can now have loss relief in these situations.

But that's a different question. For the OP's situation, I think your "do nothing" option might be ruled out.

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to Tax Dragon
06th Nov 2017 17:34

No, it is still there. If HMRC want to use discovery they will have to issue a discovery assessment, which reopens the possibility of a claim that has not been made, if indeed it would otherwise be out of time.

In these circumstances though, I'd be inclined to notify HMRC, indicating that a claim is made, and then see if they will back down over a requrement to file a return that ensued.

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to Tax Dragon
06th Nov 2017 17:42

Posted at the same time as PNL's response above.

its no wonder i get confused with this stuff. So to be clear if we do nothing, and HMRC look at this in the future we are potentially out of time to make the claim?

I assume the time limit for a claim would be 4 years, so if they say we are careless (not quite, just don't want to jump through all the hoops) they could come back in 6 and we are stuffed.

So on a wider point, assuming a claim is required. Can the FORM of a claim be via a letter? Does it have to be a SA900? Which we cant file without a UTR, and we cant get a UTR without registering the Trust, (which is a ball ache trying to get a disinterested and partially deaf octogenarian who doesn't use email to marshall fellow octogenarians to get their NI numbers to fill in paperwork they don't care about)

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to ireallyshouldknowthisbut
06th Nov 2017 18:24

You're getting carelessness from TMA s43A(1)(b)? Then I agree. And presumably by bringing it to HMRC's attention and claiming (in whatever form), you are defending yourself against accusations of carelessness. (I feel as if Portia has essentially already made that point.)

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