SACM9005 - Consequential Claims after Assessment and Amendment: Background and Legislation

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

This part of the manual deals with claims and elections that may be made when

  • an assessment is made by HMRC, or
  • a self-assessment is amended by HMRC, for example, on the conclusion of an enquiry, or
  • an enquiry is concluded by a contract settlement.

Time limits for making claims are not extended simply because an enquiry is open.

The legislation does however allow a taxpayer to make various out-of-time actions where we make a discovery assessment or amend a return in an ITSA enquiry closure notice. You should follow the same rules in contract settlements.

Behaviours

Different provisions apply depending on whether or not the additional liability arises as a result of deliberate or careless behaviour.

If the additional liability is not a result of deliberate or careless behaviour, the provisions are wider. They extend to applications or notices as well as claims and to the revocation or variation of claims or elections, unless expressed to be irrevocable.

If you settle an enquiry or compliance check by contract you should allow in your final figures the equivalent of any relief or allowance the taxpayer would be entitled to under S43C if their return had been amended. However if the taxpayer would like to make a claim following the settlement, please see EM6413 for guidance.

Legislation

The relevant legislation is found at

  • S43C - out-of-time actions following an amendment to a return by an SA enquiry closure notice
  • S36(3) – giving effect to consequential claims or applications
  • S43A&B – further assessments
  • S43(2) – time limits for making a consequential claim.

All additions

Whether culpable or non-culpable additions are involved, S43(2), as applied by S43C for closure notices, allows a taxpayer to make a claim that could not have been allowed but for the making of the assessment or amendment.

Time limit for making a consequential claim

The claim can be made up to the end of the year of assessment following the one in which the assessment was made or closure notice issued. In addition other legislation can apply depending on whether the additions are culpable or non-culpable.

See SACM9010 for culpable additions and SACM9015 for non-culpable additions.