SACM9025 - Consequential Claims after Assessment and Amendment: Enquiries into Late Claims in Returns

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

TMA70/S43C

A claim or election may be included in a return that is delivered after the time limit for making the claim or election has passed.

If you want to challenge such a late claim or election this can be done by

  • correcting the return to exclude the claim (as it is an obvious error) under S9ZB, or
  • opening an enquiry into the return.

However, when an enquiry into a return is closed and the return is amended to remove a late claim or election, S43C will sometimes apply to allow the taxpayer to make the claim that has been disallowed by the enquiry.

Where this is the case the enquiry into the late claim in the return is ineffective and should not be opened unless some other aspect of the return will also be enquired into. The effect of S43C on certain late claims is detailed below.

‘Sideways’ Loss Claims

S43C applies to make enquiries into late claims to set losses off ‘sideways’ ineffective.

Claims to ‘Carry-Back’ Losses or Payments

This includes claims

  • to carry back losses, and
  • to carry-back pension contributions.

Where a claim to ‘carry back’ losses or payments is concerned the taxpayer will not usually benefit from S43C if at least careless behaviour is involved.

This is because a successful claim would give rise to a repayment or set-off, and so on, under Sch 1B Para 2(6). When the return is amended at the end of the enquiry

  • the claim would be removed, including the amount claimed under paragraph 2(6)
  • S43C(1) would then apply S36(3) and could require the same claim to be given effect to in determining the amount of tax to be charged by the amendment.

However, the amendment to the return in respect of the carry back claim will not charge any tax, it will merely reduce the repayment etc., due. There is no scope to give effect to the claim in the amendment so the amendment to the return would be effective.

S43C(1) also applies S43(2) but that subsection is very unlikely to help the taxpayer.

If at least carelessness is not involved S43C(2) applies section S43A which is wider in scope than S36(3) and will allow the taxpayer to make the carry-back claim again.

See CH81140 for guidance on when at least careless behaviour is involved so S43C(1) will apply. In most cases the late submission of a return is likely to involve at least careless behaviour.

Other Claims

For other late claims and elections in returns you should consider carefully whether S43C will allow the taxpayer to make the same claim or election at the end of the enquiry. Where the enquiry into the late claim or election will be ineffective an enquiry should not be opened unless some other aspect of the return will also be enquired into.