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would you amend the ITR?

filed in good faith - ER claim

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If a tax return was filed in good faith several years ago, with full details of the calculation for the ER claim and then subsequently (a year or so later) HMRC won a case with another taxpayer which, if applied to your scenario, would mean that you should not have claimed ER either, would you amend the previous return?  The case was in the upper tribunal and won't be appealed.

The accountant who filed the original return is adamant that the taxpayer should re-file his return (having just discovered the case).  The gain is actually c 6 years ago now, so all well in the past.

Thanks for your input.

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By michaelblake
23rd Sep 2020 11:40

The ICAEW ethical guidance Helpsheet C1 in relation to this matter
https://www.icaew.com/technical/tax/pcrt/2019/helpsheet-c-dealing-with-e...
notes at paras 41 and 42 that

41. Where the error relates to a self-assessment return the client should amend any self-assessment affected by the error if they are within the time limit to do so. Where the time limit for amending a self-assessment has passed the client should provide HMRC with sufficient and accurate information to explain the error.

42. If HMRC fails, or is unable, to take any necessary action, for example to issue a discovery assessment, a member is under no legal obligation to draw HMRC’s failure to their attention, nor to take any further action. Where it is relevant a member should ensure that the client is aware of the potential for interest and/or penalties.

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Replying to michaelblake:
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By snickersinatwix
23rd Sep 2020 11:48

thank you - that is very helpful

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Psycho
By Wilson Philips
23rd Sep 2020 13:05

I would say that it depends very much on the nature of the 'error' and how closely aligned your client's circumstances are to those of the case.

A decision of the UT is binding only on other cases where similar issues have been raised. Unless you are convinced that the filing position was wrong I would suggest that you do nothing.

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By fawltybasil2575
23rd Sep 2020 13:28

@ snickers . . . (OP).

Firstly, you are fortunate that Michael’s post so promptly and accurately “nails it”.

Might I comment upon a couple of concerns.

Firstly, and taking at face value your comment that “the accountant who filed the original return is adamant that the taxpayer should re-file his return" that accountant’s advice is of course unfortunately incorrect, given that (as Michael’s link to the ICAEW guidance states) one:-

“should amend any self-assessment affected by the error if they are within the time limit to do so” (in your client’s case, it is substantially outside “the time limit”).

Secondly, I note your stating that:-

“HMRC won a case with another taxpayer which, if applied to your scenario, would mean that you should not have claimed ER either".

I thus have to ask whether YOU (and your client) are yourselves certain that your client’s case is 100% “on all fours with” the Upper Tribunal case: if perhaps it is only the accountant who has expressed that “on all fours” opinion, then (with respect to them) one must of course be conscious of the incorrect advice given by them, and such fact must give you even more reason to review the accuracy of that “on all fours” opinion.

If you are willing to provide more detail re your client’s case (and indeed to identify the UT case) then we can perhaps provide views on whether we agree that your client’s case does indeed require the action recommended in the ICAEW guidance.

Basil.

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By Tax Dragon
23rd Sep 2020 12:48

Why wasn't the question asked 5 years ago when HMRC won the case?

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By justsotax
23rd Sep 2020 13:22

from 6 years ago accountant remembers a specific claim with the same scenario on which he made a claim for a now ex client......and it crosses his mind to check back to that case now (recalling the client name/reference and relevant year that is held in his archives)........seems a bit strange and random....?!

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