SACM2005 - Definition of Claims: What are Claims?

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

Claims

TMA70/S42(1)

TMA70/S118(1)

For the purposes of this manual something is a ‘claim’ where the Taxes Acts say that a claim can be made

  • for relief to be given, or
  • for any other thing to be done.

These claims are subject to S42 unless the legislation says that S42 does not apply.

The ‘Taxes Acts’ are defined at S118(1).

An example of a claim covered by this manual is a claim for relief in respect of trading losses under ITA07/S64. The legislation applying to that relief says “a person may make a claim for trade loss relief against general income…”

So it is clear that a claim for relief is involved here and as it is within S42, this manual will cover it.

If you are considering a case and are not sure whether it involves a claim, you will need to check whether the legislation mentions the making of a claim. If it does, this manual will be relevant. If necessary contact the specialist for the provision being considered and ask them for confirmation.

Elections

Some sections of the Taxes Acts stipulate that taxpayers should make an “election” in relation to a particular aspect of their tax affairs and these are usually made in writing. S42(10) says

This section (except subsection 1A above) shall apply in relation to any elections as it relates to claims.

This means that you treat elections as you would claims.

Distinction between a claim and an election

Claims and elections have different functions and are not dealt with in exactly the same way. The main differences are:

  • there is no general time limit for elections comparable to the time limit for claims for relief provided by TMA70/S43 (1), but normally the provision conferring the right of election will specify a period (or time limit) within which it must be made - often 12 months from the 31 January next following the year of assessment under ITSA;
  • in general an election is concerned with, and alters, only the basis on which the taxpayer’s liability is to be computed: it is not directly concerned with the amount of his or her liability (which can be computed only when the correct basis has been established);
  • in certain circumstances there are provisions that extend the time limit for claims for a relief or allowance but not for elections.