Share this content
16

How far can HMRC carry back personal tax repayment

How far can HMRC carry back a personal tax repayment

Didn't find your answer?

Hello, I recently claimed a tax repayment circa £5,000 for the year ended 5 April 2018, for a client.  Apparently (although we did not know this at the time of making the claim), he still had a personal tax debt of £5,500 for the year ended 5 April 1998, precisely 20-years earlier.  Whilst I appreciate that HMRC could lauch an Enquiry in to a tax payer's affairs going back 20-years, if fraud or some other serious issue was suspected (which does not apply to my client's case), I was not aware they could take a repayment and carry it back to cover a 20-year old tax debt which they had ceased 'pursuing' 17-years ago!

I was under the impression that HMRC could only carry back such a repayment for a very-maximum period of 6 years.  If you believe HMRC are wrong to carry it back 20 years, could you please tell me where I can find their rules' guidance notes so I can quote them when challenging this?  Or, if you believe HMRC are within their rights to make the 20-year carry back, can you please tell me where I can find those guidance notes?  I have searched high and low for such notes and can't find them anywhere.

Replies (16)

Please login or register to join the discussion.

avatar
By WhichTyler
11th Oct 2019 11:44

james burton wrote:

I was under the impression that HMRC could only carry back such a repayment for a very-maximum period of 6 years. 

Or can you tell us where you got this impression from, before we go off hunting to try to prove the opposite?

Thanks (0)
Replying to WhichTyler:
avatar
By WhichTyler
11th Oct 2019 11:47

Or perhaps you were thinking about National Insurance?

https://www.nationaldebtline.org/EW/factsheets/Pages/time-limits-for-rec...

Google is your friend...

Thanks (1)
Replying to WhichTyler:
avatar
By Accountant A
11th Oct 2019 13:07

WhichTyler wrote:

Google is your friend...

Oh good! I thought I was the only on on here who has access to Google!

Thanks (0)
Replying to WhichTyler:
avatar
By james burton
11th Oct 2019 11:59

This impression is merely my belief. I'm an accountant of many years experience. Simply, I was under the impression that HMRC could not go back any further than 6-years. I've not specifically checked this, to confirm my belief, as I've been unable to locate their precise rules on the matter. And, when speaking with HMRC, they were neither able to tell me where I could find those rules. In fact HMRC's stance on the matter was that they would write to set out their opinion in a letter. Now, by phone, when I was chasing that letter, they say they're not going to send it and, if I disagree with them taking the repayment back 20-years, my only course of action is to write to them and specifically quote their own rules and guidance notes as to why they are wrong.

Thanks (0)
Replying to james burton:
avatar
By WhichTyler
11th Oct 2019 12:49

james burton wrote:

T I've not specifically checked this, to confirm my belief, as I've been unable to locate their precise rules on the matter. .

Perhaps because those rules don't exist? This would explain why you and HMRC are unable to locate them. So perhaps your belief is wrong? (as indicated by my earlier link, under Other Debt)

Thanks (0)
avatar
By mike01
11th Oct 2019 12:04

I believe that there is no time limit in which HMRC can pursue tax debt provided,of course,that the relevant assessments etc were made within the appropriate time limits - Limitation Act 1980 S37.

Thanks (0)
avatar
By Jholm
11th Oct 2019 13:20

I can't see why they wouldn't retain the repayment in this instance. It seems reasonable to me.

Thanks (2)
Stepurhan
By stepurhan
11th Oct 2019 13:53

Do you and your client agree that the £5,500 was due and not paid?

The legislation you are thinking of is the Limitations Act 1980, which says debts lapse if action is not taken to assert them within 6 years. However, tax liabilities are specifically excluded from this act so no such limitation applies.

Thanks (0)
avatar
By bernard michael
11th Oct 2019 14:01

Although the OP says they finished "chasing the debt" did they send correspondence annually showing the debt as outstanding. If they did that would be construed as "pursuing it"

Thanks (0)
Replying to bernard michael:
Stepurhan
By stepurhan
11th Oct 2019 14:47

That is the point of the exemption from the Limitations Act 1980. For everyone else the debt lapses after 6 years if not pursued in that time. That does not apply to HMRC.

Thanks (0)
avatar
By Livepay
11th Oct 2019 14:49

Not sure if this will throw some light on the subject https://www.telegraph.co.uk/finance/personalfinance/tax/9590784/Were-com...

Thanks (0)
avatar
By Accountant A
11th Oct 2019 15:51

james burton wrote:

Hello, I recently claimed a tax repayment circa £5,000 for the year ended 5 April 2018, for a client.  Apparently (although we did not know this at the time of making the claim), he still had a personal tax debt of £5,500 for the year ended 5 April 1998, precisely 20-years earlier. 

Client finally repays tax debt. A good news story for once!

Thanks (1)
avatar
By sosleepy
11th Oct 2019 16:49

Look on the bright side. Taking into account inflation/indexation etc, paying £5k now has cost him less than it would have done 20 years ago. So he's still better off.

Thanks (1)
RedFive
By RedFive
11th Oct 2019 17:03

I'm with AccountantA on this one.

We minimise tax liabilities for our clients using various ways and means, but one of them is not to say 'wait 20 years and they might forget about it'.

Thanks (0)
avatar
By unearned luck
12th Oct 2019 17:26

1 You are looking through the wrong end of the telescope. It is the debt being brought forward not the repayment being carried back.

2 Why were you unaware of the debt when you made the claim?
Was the client also unaware? Did you not check the SA record or wasn’t it recorded thereon? What statements of account have been issued by HMRC that show the debt? Have HMRC pursued the debt? If not, why not? (As usual, a dearth of facts in the query).

3 If this debt has indeed appeared out of the blue, then:
a) Challenge its correctness – it could be an accounting error by HMRC. It not being a true debt would explain HMRC’s twenty years of apparent backside sitting.
b) Perhaps it is tax that was stood over because an assessment or closure notice was under appeal. In which case the appeal could still be live.
c) If it is correct, then consider ESC A19 (I agree with the respondents who say that people should pay their taxes, but there are limits to that proposition when HMRC’s error or delay have caught the taxpayer by surprise, if that is the case.).

Thanks (0)
avatar
By bernard michael
14th Oct 2019 09:52

The fact that HMRC are not pursuing the debt doesn't mean they've written it off unless they specifically say so

Thanks (0)
Share this content