No Tax Refund Time Bar Stopped

No Tax Refund Time Bar Stopped.

The Tax Chamber of the Upper Tribunal has ruled that HMRC cannot place a time bar on consumers requesting a refund of tax when they have overpaid tax in the past. Current practice by HMRC was that where a claim is made for a tax refund that is for or more years after the end of the tax year in question, the claim would be rejected. A one-sided story this where you cannot take Her Majesty to court Her Majesty's Revenue and Customs (HMRC) but they can take you to court. So you as a taxpayer cannot get a tax refund if you did not claim it in time but HMRC can go back as many years as they wish to claim underpaid tax.

Upper Tribunal

The Upper Tribunal was established in 2008 to be part of the U.K.'s justice system and review any administrative practices good or bad and indeed make changes and rulings where appropriate. There are four chambers within the Upper Tribunal of which one is the Tax and Chancery Chamber, the others being the Administrative Appeals Chamber, the Lands Chamber and the Immigration and Asylum Chamber.

The case resulting in the Tax Chamber of the Upper Tribunal reversing HMRC's policy was Higgs v HMRC [2015] where a self-employed solicitor had overpaid more than £27,000 in payments on account for income tax, which are based on your previous year’s profits, and subsequently the profits for the year in question 2006/7, where a self-assessment return had not been completed until 2011, were at a lower level resulting in tax actually being overpaid but never being reclaimed as they were time-barred.

Warning – Only Applies if No Tax Return Done

Interestingly though, the ruling only affects tax refunds where a tax return has not been submitted. In simple terms, if you submit your tax return and get it wrong and subsequently overpaid tax you do not reclaim within the time bar, TOUGH. You will not receive a tax refund. You should have got it right in the first place or indeed have taken steps within four years to correct any errors or omissions.