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Contact: michael.firth@taxbar.com
Procedure.Tax
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B6: Amendment of a direct tax return
Amendment of personal tax return by taxpayer
(1) A person may amend his return under section 8 or 8A of this Act by notice to an officer of the Board." (TMA 1970, s.9ZA(1))
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Amendment is taxpayer’s only way of challenging self-assessment
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“In other words, Mr Byrne was liable to pay the amounts shown on his self-assessment. It is irrelevant that he returned income that was not his own: the fact that he self-assessed himself to tax on that income means that the tax is payable…We note that while a taxpayer has no right to challenge his own self-assessments, he does have a right to amend them. The amendment must be made in accordance with the terms of s 9ZA TMA which requires the amendment to be made within 12 months of the filing date. Mr Byrne made no amendment of his self-assessment returns so cannot rely on this and he is many years out of time to make an amendment now.” (Byrne v. HMRC [2017] UKFTT 144 (TC), §§38…39, Judge Mosedale)
Time limit
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"(2) An amendment may not be made more than twelve months after the filing date.
(3) In this section “the filing date”, in respect of a return for a year of assessment (Year 1), means—
(a) 31st January of Year 2, or
(b) if the notice under section 8 or 8A is given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice." (TMA 1970, s.9ZA(2) - (3))
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Time limit does not apply where first return was unsolicited unless treated as a return under s.12D
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“The HMRC submission is that the unsolicited first 2006-07 return should be treated as if it was a return filed in response to a notice under s.8 TMA. However, it is common ground that no notice was issued under s.8 TMA. It is a fact that the unsolicited first 2006-07 return was not filed in response to such a notice…Section 9ZA TMA applies, as is indicated in its sub-section (1), to a “return under section 8 or 8A of this Act”. The express statement that it applies to such returns necessarily implies that it does not apply to returns that are not under section 8 or 8A TMA…In the present case, at the time that the Appellant filed the second 2006-07 return, there had previously already been submitted the first 2006-07 return. HMRC has not disputed that the Appellant could, by filing the second return, amend the first. The HMRC objection is rather that the time limit under s.9ZA for making any such amendment had passed by the time that the second 2006-07 return had been filed. For the reasons above, the Tribunal finds that the time limit in s.9ZA is not applicable.” (Weerasinghe v. HMRC [2013] UKFTT 144 (TC), §§34…36…42).
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Extension of time limit: HMRC discretion
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See C2: Time limits and late claims
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Extended time limit: follower notices
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See FA 2014, Part 4, Chapter 2
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Amendment during enquiry does not take effect until enquiry concluded
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(1) This section applies if a return is amended under section 9ZA of this Act (amendment of personal or trustee return by taxpayer), or in accordance with Chapter 2 of Part 4 of the Finance Act 2014 (amendment of return after follower notice), at a time when an enquiry into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment and—
(a) if the officer states in a partial or final closure notice that he has taken the amendment into account and that—
(i) the amendment has been taken into account in formulating the amendments contained in the notice, or
(ii) his conclusion is that the amendment is incorrect,
the amendment shall not take effect;
(b) otherwise, the amendment takes effect when a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued.
(4) For the purposes of this section the period during which an enquiry is in progress in relation to any matter is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued." (TMA 1970, s.9B)
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Amendment of partnership return by the partner who made the return
"(1) A partnership return (including anything included in the return by virtue of section 12ABZB(7)(b) (amendment of partnership return following referral to tribunal)) may be amended by the partner who made and delivered the return, or his successor, by notice to an officer of the Board." (TMA 1970, s.12ABA(1))
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Consequential amendments to partners' returns
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"(3) Where a partnership return is amended under this section, the officer shall by notice to each of the partners amend—
(a) the partner's return under section 8 or 8A of this Act, or
(b) the partner's company tax return,
so as to give effect to the amendment of the partnership return." (TMA 1970, s.12ABA(3))
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Time limit: 12 months from filing date
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"(2) An amendment may not be made more than twelve months after the filing date." (TMA 1970, s.12ABA(2))
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"(4) In this section “the filing date” means—
(a) in the case of a partnership which includes one or more individuals, in respect of a return for a year of assessment (Year 1)—
(i) 31st January of Year 2, or
(ii) if the notice under section 12AA is given after 31st October of Year 2, the last day of the period of three months beginning with the date of the notice, and
(b) in the case of a partnership which includes one or more companies, the end of the period specified in section 12AA(5B) or (5C)." (TMA 1970, s.12ABA(4))
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Amendment during enquiry does not take effect until enquiry concluded
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"(3) So far as the amendment affects any amount stated in the partnership statement included in the return, it does not take effect while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment and—
(a) if the officer states in a partial or final closure notice that he has taken the amendment into account and that—
(i) the amendment has been taken into account in formulating the amendments contained in the notice, or
(ii) his conclusion is that the amendment is incorrect,
the amendment shall not take effect;
(b) otherwise, the amendment takes effect when a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued.
(4) Where the effect of an amendment is deferred under subsection (3) above—
(a) no amendment to give effect to that amendment (“the deferred amendment”) shall be made under section 12ABA(3) of this Act (consequential amendment of partners' returns) while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment;
(b) if the deferred amendment does not take effect but is taken into account as mentioned in subsection (3)(a)(i) above, section 28B(4) of this Act (amendment of partners' returns consequential on amendment of partnership return by closure notice) applies accordingly; and
(c) if the deferred amendment takes effect under subsection (3)(b) above, any necessary amendment under section 12ABA(3) of this Act may then be made." (TMA 1970, s.12AD(3) - (4))
Amendment of company tax return
"(1) A company may amend its company tax return by notice to an officer of Revenue and Customs.
(2) The notice must be in such form as an officer of Revenue and Customs may require.
(3) The notice must contain such information and be accompanied by such statements as an officer of Revenue and Customs may reasonably require." (FA 1998, Sch 18, para 15(1) - (3))
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Time limit: 12 months from filing date
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"(4) Except as otherwise provided, an amendment may not be made more than twelve months after—
(a) the filing date, or
(b) in the case of a return for the wrong period, what would be the filing date if the period for which the return was made were an accounting period." (FA 1998, Sch 18, para 15(4))
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Amendment during enquiry does not take effect until enquiry concluded
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"(1) This paragraph applies if a company amends its company tax return at a time when an enquiry into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects—
(a) the amount stated in the company's self-assessment as the amount of tax payable, or
(b) any amount that affects or may affect—
(i) the tax payable by the company for another accounting period, or
(ii) the tax liability of another company for any accounting period,
it does not take effect while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment.
This does not affect any claim by the company under section 59DA of the Taxes Management Act 1970 (claim for repayment in advance of liability being established).
(4) An amendment whose effect is deferred under sub-paragraph (3) takes effect as follows—
(a) if the conclusions in a partial or final closure notice state either—
(i) that the amendment was not taken into account in the enquiry, or
(ii) that no amendment of the return is required arising from the enquiry,
the amendment takes effect when a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued;
(b) in any other case, the amendment takes effect as part of the amendments made by the closure notice.
(5) For the purposes of this paragraph the period during which an enquiry is in progress in relation to any matter is the whole of the period—
(a) beginning with the day on which an officer of Revenue and Customs gives notice of enquiry into the return, and
(b) ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued." (FA 1998, Sch 18, para 31)
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Amendment of provisions in insurance company tax return
"(1) This paragraph applies where a company carrying on insurance business delivers a company tax return based wholly or partly on accounts drawn up using the method described in paragraph 58 in Section E of Part 2 of Schedule 3 to the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008.
That paragraph provides for a technical provision to be made in the accounts which is later replaced by a provision for estimated claims outstanding.
(2) Where this paragraph applies—
(a) the company may make any amendments of its return arising from the replacement of the technical provision at any time within twelve months from the date on which the provision was replaced, and
(b) an officer of Revenue and Customs may give notice of enquiry into the return at any time up to two years from that date.
(3) Nothing in this paragraph prevents notice of enquiry being given at any later time in accordance with the general rule in paragraph 24(3)." (FA 1998, Sch 18, para 85)
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Amendment of friendly societies returns
"(1) This paragraph applies where a company tax return is delivered by a friendly society which is required by section 5.2 of the IPRU (FSOC)) to cause an investigation to be made into its financial condition at least once in every period of three years.
(2) Where this paragraph applies—
(a) the society may make any amendments of its return arising from the relevant investigation at any time within 15 months from the date as at which that investigation is carried out, and
(b) an officer of Revenue and Customs may give notice of enquiry into the return at any time up to 27 months from that date.
(3) “The relevant investigation” means—
(a) if the return is for a period as at the end of which there is carried out an investigation under section 5.2 of the IPRU (FSOC) into the financial condition of the society, that investigation;
(b) if the return is not for such a period, the first such investigation to be made into the financial condition of the company as at the end of a subsequent period.
(4) In this paragraph, “IPRU (FSOC)” means the Interim Prudential Sourcebook for Friendly Societies made by the Prudential Regulation Authority under the Financial Services and Markets Act 2000." (FA 1998, Sch 18, para 87)
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SDLT returns
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- Amendment by purchaser ny notice within 12 months of filing date
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"(1) The purchaser may amend a land transaction return given by him by notice to the Inland Revenue.
(2) The notice must be in such form, and contain such information, as the Inland Revenue may require.
[...]
(3) Except as otherwise provided, an amendment may not be made more than twelve months after the filing date." (FA 2003, Sch 10, para 6)
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- No exception to 12 month time limit for contract substantially performed but not completed
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"[59] Like the UT, I consider the irresistible inference to be that Parliament was, by requiring the claim for repayment in section 44(9) to be made only by amendment of the return, intending to attract the generally applicable time limit in Schedule 10, paragraph 6(3) FA 2003.
[60] Contrary to Mr Thomas' submissions, I do not regard this result as unfair in this case or more broadly. As the UT pointed out, if the taxpayer had sub-sold the property to someone for £48m (or indeed £41m), he would not have been entitled to any repayment of SDLT. Tax would then have been charged on two different people by reference to different periods as a natural incident of the SDLT scheme. In effect, the taxpayer sub-sold the property to his brother, Nicholas Candy, for about £41m, although the transaction was structured as a novation under which the taxpayer's remaining obligations were extinguished and replaced with new obligations undertaken by Nicholas Candy. I see no reason why the taxpayer should be entitled to a refund in the circumstances. Moreover, if his argument is correct, he could enjoy the property for 20 years, never completing and leaving a small balance outstanding, then novate the uncompleted contract to someone else and still reclaim the SDLT.
[61] Nor is there any basis for criticising the UT's conclusion that an avoidance charge that could be unwound without any time limit could be open to abuse. The point it made was that the absence of a time limit could permit arrangements where the enjoyment of the property could extend to lengthy periods during which the contract had been substantially performed. If SDLT could then be reclaimed when the ownership of the property changed hands, the system of SDLT would be undermined. I agree with the UT that this was the sort of risk that Parliament would have wished to avoid. To do so by means of a hard-edged time limit that avoids the need to resolve time-consuming disputes along Ramsay lines is much easier to operate for HMRC and promotes certainty and finality for all involved." (Candy v. HMRC [2022] EWCA Civ 1447, Simler, Arnold, Nugee LJJJ)
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"[122] We consider that, for the reasons set out above, s.44(9) of FA 2003 does not operate as an exception to the normal time-limit for amending land transaction returns given by para. 6(3) of Sch.10 to that Act." (HMRC v. Candy [2021] UKUT 170 (TCC), Mellor J and Judge Andrew Scott)
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- Amendment seeking repayment of tax must be accompanied by contract etc.
"(2A) If the effect of the amendment would be to entitle the purchaser to a repayment of tax, the notice must be accompanied by—
(a) the contract for the land transaction; and
(b) the instrument (if any) by which that transaction was effected." (FA 2003, Sch 10, para 6)
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"[24] It is also clear, in my judgment, that if the effect of an amendment is to entitle a purchaser to a repayment of SDLT, given the statutory language - ie “must be accompanied” - it will not be valid unless and until the prescribed documents are provided to HMRC. Until then the amendment is not complete as the required documents are an integral part of the process of the amendment and not ancillary to it, solely for the purpose of enabling a repayment to be made." (Merchant v. HMRC [2020] UKFTT 299 (TC), Judge Brooks)
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- Amendment during enquiry does not take effect until enquiry concluded
"(1) This paragraph applies if a return is amended under paragraph 6 (amendment by purchaser) at a time when an enquiry is in progress into the return.
(2) The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.
(3) So far as the amendment affects the amount stated in the self-assessment included in the return as the amount of tax payable, it does not take effect while the enquiry is in progress and—
(a) if the Inland Revenue state in the closure notice that they have taken the amendments into account and that—
(i) the amendment has been taken into account in formulating the amendments contained in the notice, or
(ii) their conclusion is that the amendment is incorrect,
the amendment shall not take effect;
(b) otherwise, the amendment takes effect when the closure notice is issued.
(4) For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—
(a) beginning with the day on which notice of enquiry is given, and
(b) ending with the day on which the enquiry is completed." (FA 2003, Sch 10, para 18)
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HMRC accepting late amendment and enquiring into it
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"[31] Accordingly, I am not able to consider whether HMRC should have accepted the late amendment to the Return. For present purposes it is sufficient to note that the amendment was accepted.
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[33] However, having concluded that the amendment to the Return was made on 4 May 2017 and it is not disputed that HMRC opened the enquiry by letter of 29 January 2018, it follows that the enquiry did commence within nine months of the amendment and is therefore valid." (Merchant v. HMRC [2020] UKFTT 299 (TC), Judge Brooks)
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