Incorrect Tax Return outside the 4 year time limit

Incorrect Tax Return outside the 4 year time limit

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Hi

We have discovered that Tax Returns for a married couple for the 2011 Tax year are now wrong.It relates to the CGT pages. The couple transferred properties to their children some children were gifted 100% whilst others were gifted 50%. An error in a spreadsheet ( there were numerous enhancement expenditures)  caused the gains for some properties to be entered in both the husband and wife's Tax returns when it should have been 50% of the gain shown in their respective Tax Returns. This has resulted in an large overpayment of Tax.

Has anybody any experience of appealing to HMRC outside the 4 year time limit. We believe the only way to address this is if HMRC were to raise a discovery assessment which would allow the clients to amend their original return  but this is highly unlikely given the passage of time. 

Replies (5)

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By Tim Vane
17th Sep 2018 13:14

You believe wrong. Firstly the time limit for amendment is one year, not four (not sure where you’d get that number from). Yes it is possible to correct the error. Contact an accountant and they will be able to help you.

EDIT - apologies, read this on the train this morning and misread my tablet screen. I thought it was a 2014 return, hence my response. Now I see on my pc screen it is a 2011 return so I agree it is out of time. Presumably the mistake will unwind once the properties are sold so the parents have essentially gifted the tax difference to the children.

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Replying to Tim Vane:
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By Justin Bryant
17th Sep 2018 10:11

How do you correct this error and get a CGT refund? I don't think it's possible to make an overpayment relief claim per the link below as the 4 year deadline has long expired.

https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam114045

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Replying to Tim Vane:
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By Mcgovern43
20th Sep 2018 21:57

Tim/Justin
Thanks for the reply. Although HMRC says that the overpaid Income Tax is irrecoverable does that also imply that credit cannot be given on the overpaid tax for future CGT liabilities. Their manual is silent on this. The 4 properties affected were 50% transferred to the children. Are you saying that credit can still be given on any future disposal as this what your reply implies. I have informed my client that he needs to write to HMRC to find out his position. Unfortunately the client changed Accountant 6 years ago and the new Accountant did not pick up the mistake from the working papers as I had to provide the new accountant with my CGT calculations for base cost and unclaimed enhancement expenditure.

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Replying to Mcgovern43:
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By Justin Bryant
20th Sep 2018 10:21

Unless Tim (or someone else) replies enlightening us all on how this overpaid tax can be recovered you should assume he's wrong and that it is in fact irrecoverable per my above comment. (Although there may be one rather extreme way it could potentially be done, relying on Portland Gas.)

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