SACM6000 | Giving Effect to Claims

Throughout this manual legislative references are to the Taxes Management Act 1970 (TMA70), unless otherwise stated.

Sch1A/Para4

Once a claim, or a subsequent amendment, has been made, HMRC must normally give effect to the claim ‘as soon as is practicable’. This may mean that

• tax is discharged or repaid

• an adjustment is made to the PAYE code number to reduce the tax payable or repay tax overpaid

• individual partners benefit from a discharge or repayment of tax where a claim was made by the partnership.

Wherever possible a claim or election must be included in a self-assessment tax return (or an amendment to a return). By inclusion the taxpayer automatically makes it known through entries in the return how the claim is to take effect.

Where the claim results in a repayment of tax, that repayment will be made, subject to the security checks that are an integral part of the repayment process. The return as a whole, including the claim, still remains subject to the ‘check later’ process and an enquiry may be opened if risks are established.

Where it isn’t possible to include the claim in a return, the claim is still subject to the same ‘process now check later’ procedure that applies to returns.

See below for giving effect to claims which are subject to enquiries.

Enquiries

Sch1A/Para8

Where a claim is subject to an enquiry, the action needed to give effect to it doesn’t need to be taken until the enquiry is concluded. However, the officer of the Board responsible for the enquiry may give effect to the claim, in whole or in part, on a provisional basis.

Where a claim generates a repayment you can open an enquiry and withhold the repayment. This can be the best course of action to follow because it often prevents any problems with the recovery of tax at the conclusion of the enquiry. In avoidance cases it also prevents any groundless complaints that we have somehow encouraged or tacitly agreed to schemes by making the repayment.

Following the closure of an enquiry into a claim, HMRC must give effect to the claim, as amended by the closure notice, within 30 days of the date on which the closure notice was issued.