In April 2010, ‘Error or Mistake Relief’ was replaced by the new ‘Overpayment Relief’. It applies to businesses and individual taxpayers who fill in a tax return. This ‘Overpayment Relief’ can be claimed for two reasons:
- HMRC believe that you owe more tax than you have paid, but you disagree.
- You have paid more tax than necessary because you made a mistake on your tax return.
Example:
If you have completed a tax return in the last four years and have not entered all of your work related expenses on your original tax return you can make an overpayment relief claim to claim back the tax relief you are entitled to.
So, if I make late changes to my tax return, I could qualify?
No, if you submit your tax return, then correct an error later, this is not dealt with in the same way as an overpayment relief claim. It also doesn’t become a replacement for other potential tax relief claims. The most notable being loss and capital allowance claims, which must meet strict deadline criteria.
What you need to include in an Overpayment Relief claim…
Overpayment claims must be made within four years of the end of the tax year in question. They must be submitted in writing by the taxpayer that is due the tax relief, or their official representative.
You must include:
- The reasons for submission – how HMRC’s erroneous assessment or tax return mistake was made.
- Written evidence which shows the amount of tax paid, if you are applying for a repayment.
- Total amount of tax and Class 4 NICs that has been wrongly calculated (by you or HMRC)
- The tax year involved (April to April)
- The phrase ‘This claim is being made under Paragraph 51, Schedule 18, Finance Act 1998’, if your Overpayment claim relates to Corporation Tax.
- The phrase ‘This claim is being made under Schedule 1AB Taxes Management Act 1970’, if your claim relates to Income or Capital Gains tax overpayments.
- Any other appeals made about this overpayment or inflated assessment.
- A ‘declaration’ that you have provided full, correct information in your claim ‘to the best of your knowledge’.
Extra Information
- ‘Prevailing practice’ – this means that if a claim for Overpayment Relief relates to taxes paid in breach of EU Law, then HMRC will not discard the claim because the amount of tax was worked out “in accordance with prevailing practice”. (As ruled by the Court of Appeal.)
- ‘Special Relief’ – as part of HMRC’s commitment to ‘fair’ tax collection, they will not collect tax due or turn down a tax relief application when it is considered “completely unreasonable”. This only applies to certain situations in which HMRC deem it “unconscionable” to apply usual tax law. For example insolvency or illness.
Tony Shanks