Synopsis: The Upper Tax Tribunal has ruled that HMRC, contrary to their long-standing position, cannot refuse a taxpayer’s claim for a refund of overpaid tax, even if the claim is made more than four years after the end of the tax year concerned.

In a significant reversal of HMRC policy, the Upper Tribunal has ruled that HMRC has no general right to refuse a taxpayer’s claim for a refund of overpaid tax going back more than four years. The case (Higgs v Revenue & Customs[2015]) concerned self-employed solicitor Andrew Higgs who had failed to submit his self-assessment return for the 2006/07 tax year until November 2011, by which time he had realised that he had overpaid £27,000 in tax for the tax year in question as a result of large payments on account that were made on the basis of the previous year’s income.

HMRC’s policy has always been that s34(1) of the Taxes Management Act 1970 (TMA) sets a time limit on rebate claims, with the effect that no assessment to tax may be made later than four years after the end of the tax year concerned and, accordingly, HMRC refused to process the form or give him a tax rebate.

However, HMRC’s position (which it has held for some years) was rejected by the Upper Tribunal on judicial review. Careful analysis of the legislation found that the s34 time limit was intended to apply only to assessments made by HMRC, while taxpayers have the right to file a self-assessment return many years after the end of the tax year concerned, and are automatically entitled to a rebate of any overpaid tax.


Following the decision, HMRC will now be forced to change its longstanding stance on ‘out of time’ tax rebate claims. However, it is important to note that the decision will be limited to instances where the taxpayer has failed to submit a tax return for the year in question. Different rules apply to returns submitted on time that are later found to contain inaccuracies.

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