Finance Act 1998 (c. 36) (c. 36)

(The document as of February, 2008)

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(a) in the case of a determination under paragraph 36, the Inland Revenue have insufficient information to determine the accounting periods of the company and exercise their power under sub-paragraph (3)(c) of that paragraph, or

(b) in the case of a determination under paragraph 37, the Inland Revenue have insufficient information to determine whether the outstanding period is an accounting period.

Determination superseded by actual self-assessment

40 (1) If after a determination has been made under paragraph 36--

(a) the company delivers a company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

(b) the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination or, if there is more than one, the determination for the period which is, or most closely approximates to, the period for which the return is made.

(2) If after a determination has been made under paragraph 37--

(a) the company delivers a further company tax return for a period ending in or at the end of the period specified in the notice requiring a company tax return, and

(b) the period is, or is treated in the return as, an accounting period,

the self-assessment included in that return supersedes the determination.

(3) Sub-paragraphs (1) and (2) do not apply to a return made--

(a) more than five years after the day on which the power to make the determination first became exercisable (see paragraph 36(2) or 37(2)), or

(b) more than twelve months after the date of the determination,

whichever is the later.

(4) Where--

(a) the Inland Revenue have begun proceedings for the recovery of any tax charged by a determination under paragraph 36 or 37, and

(b) before the proceedings are concluded the determination is superseded by a self-assessment,

the proceedings may be continued as if they were proceedings for the recovery of so much of the tax charged by the self-assessment as is due and payable and has not been paid.

Assessment where loss of tax discovered or determination of amount discovered to be incorrect

41 (1) If the Inland Revenue discover as regards an accounting period of a company that--

(a) an amount which ought to have been assessed to tax has not been assessed, or

(b) an assessment to tax is or has become insufficient, or

they may make an assessment (a "discovery assessment") in the amount or further amount which ought in their opinion to be charged in order to make good to the Crown the loss of tax.

(2) If the Inland Revenue discover that a company tax return delivered by a company for an accounting period incorrectly states--

(a) an amount that affects, or may affect, the tax payable by that company for another accounting period, or

(b) an amount that affects, or may affect, the tax liability of another company,

they may make a determination (a "discovery determination") of the amount which in their opinion ought to have been stated in the return.

Restrictions on power to make discovery assessment or determination

42 (1) The power to make--

(a) a discovery assessment for an accounting period for which the company has delivered a company tax return, or

(b) a discovery determination,

is only exercisable in the circumstances specified in paragraph 43 or 44 and subject to paragraph 45 below.

(2) Those restrictions do not apply to an assessment or determination which only gives effect to a discovery determination duly made with respect to an amount stated in another company's company tax return.

(3) Any objection to a discovery assessment or determination on the ground that those paragraphs have not been complied with can only be made on an appeal against the assessment or determination.

Fraudulent or negligent conduct

43 A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if the situation mentioned in paragraph 41(1) or (2) is attributable to fraudulent or negligent conduct on the part of--

(a) the company, or

(b) a person acting on behalf of the company, or

Situation not disclosed by return or related documents etc.

44 (1) A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if at the time when the Inland Revenue--

(a) ceased to be entitled to give a notice of enquiry into the return, or

(b) completed their enquiries into the return,

they could not have been reasonably expected, on the basis of the information made available to them before that time, to be aware of the situation mentioned in paragraph 41(1) or (2).

(2) For this purpose information is regarded as made available to the Inland Revenue if--

(a) it is contained in a relevant return by the company or in documents accompanying any such return, or

(b) it is contained in a relevant claim made by the company or in any accounts, statements or documents accompanying any such claim, or

(c) it is contained in any documents, accounts or information produced or provided by the company to the Inland Revenue for the purposes of an enquiry into any such return or claim, or

(d) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 41(1) or (2)--

(i) could reasonably be expected to be inferred by the Inland Revenue from information falling within paragraphs (a) to (c) above, or

(ii) are notified in writing to the Inland Revenue by the company or a person acting on its behalf.

(3) In sub-paragraph (2)--

"relevant return" means the company's company tax return for the period in question or either of the two immediately preceding accounting periods, and
"relevant claim" means a claim made by or on behalf of the company as regards the period in question.

Return made in accordance with prevailing practice

45 No discovery assessment for an accounting period for which the company has delivered a company tax return, or discovery determination, may be made if--

(a) the situation mentioned in paragraph 41(1) or (2) is attributable to a mistake in the return as to the basis on which the company's liability ought to have been computed, and

(b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.

General time limits for assessments

46 (1) Subject to any provision of the Taxes Acts allowing a longer period in any particular class of case no assessment may be made more than six years after the end of the accounting period to which it relates.

(2) In a case involving fraud or negligence on the part of--

(a) the company, or

(b) a person acting on behalf of the company, or

an assessment may be made up to 21 years after the end of the accounting period to which it relates.

(3) Any objection to the making of an assessment on the ground that the time limit for making it has expired can only be made on an appeal against the assessment.

Assessment procedure

47 (1) Notice of an assessment to tax on a company must be served on the company stating--

(a) the date on which the notice is issued, and

(b) the time within which any appeal against the assessment may be made.

(2) After that notice has been served on the company, the assessment may not be altered except in accordance with the express provisions of the Taxes Acts.

Appeal against assessment

48 (1) An appeal may be brought against any assessment to tax on a company which is not a self-assessment.

(2) Notice of appeal must be given--

(a) in writing,

(b) within 30 days after notice of the assessment was issued,

Application of provisions to discovery determinations

49 The provisions of paragraphs 46 to 48 (assessments: general provisions as to time limits, procedure and appeals) apply to a discovery determination as they apply to an assessment.

Part VI Excessive assessments or repayments, etc

Relief in case of double assessment

50 (1) A company which believes it has been assessed to tax more than once for the same cause and for the same accounting period may make a claim for relief--

(a) by notice in writing,

(b) given to the Board.

(2) If on a claim being made the Board are satisfied that the company has been assessed to tax more than once for the same cause and for the same accounting period, they shall amend the assessment or assessments concerned, or give relief by way of discharge or repayment of tax or otherwise, so as to eliminate the double charge.

(3) An appeal against the Board's decision on a claim for relief under this paragraph may be brought to the Commissioners having jurisdiction to hear an appeal relating to the assessment, or the later of the assessments, to which the claim relates.

Relief in case of mistake in return

51 (1) A company which believes it has paid tax under an assessment which was excessive by reason of some mistake in a return may make a claim for relief--

(a) by notice in writing,

(b) given to the Board,

(2) On receiving the claim the Board shall enquire into the matter and give by way of repayment such relief in respect of the mistake as is reasonable and just.

(3) No relief shall be given under this paragraph--

(a) in respect of a mistake as to the basis on which the liability of the claimant ought to have been computed when the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made, or

(b) in respect of a mistake in a claim or election which is included in the return.

(4) In determining a claim under this paragraph the Board shall have regard to all the relevant circumstances of the case.

They shall, in particular, consider whether the granting of relief would result in amounts being excluded from charge to tax.

For that purpose they may take into consideration the liability of the claimant company, and assessments made on it, for accounting periods other than that to which the claim relates.

(5) On an appeal against the Board's decision on the claim, the Special Commissioners shall hear and determine the claim in accordance with the same principles as apply to the determination by the Board of claims under this paragraph.

(6) Neither the company nor the Board may appeal under section 56A of the [1970 c. 9.] Taxes Management Act 1970 against the determination of the Special Commissioners, except on a point of law arising in connection with the computation of--

(a) the profits of the company for the purposes of corporation tax,

(b) any amount assessable under section 419(1) of the Taxes Act 1988 (tax on loan or advance made by close company to a participator), or

Recovery of excessive repayments etc

52 (1) The provisions of paragraphs 41 to 48 relating to discovery assessments apply to an amount to which this paragraph applies as if it were unpaid tax, unless--

(a) it is assessable under those provisions apart from this paragraph, or

(b) it is recoverable under section 826(8A) of the Taxes Act 1988 (interest overpaid which is recoverable in same way as interest charged).

(2) This paragraph applies to an amount paid to a company by way of--

(a) repayment of tax (or income tax) or payment of a tax credit,

(b) repayment supplement under section 825 of the Taxes Act 1988, or

to the extent that it ought not to have been paid.

(3) For the purposes of this paragraph--

(a) an amount is regarded as paid if it is allowed by way of set-off, and

(b) an amount is regarded as a repayment if it was intended as repayment but exceeds the amount paid by the company.

(4) An assessment made by virtue of this paragraph shall be made under Case VI of Schedule D.

(5) An assessment to recover--

(a) an amount of tax repaid to a company in respect of an accounting period, or interest on any such repayment, or

(b) an amount of income tax repaid to a company in respect of a payment received by the company in an accounting period, or interest on any such repayment,

shall be treated as an assessment to tax for the accounting period referred to in paragraph (a) or (b).

(6) The sum assessed shall carry interest at the prescribed rate for the purposes of section 87A of the [1970 c. 9.] Taxes Management Act 1970 (interest on overdue corporation tax, etc.) from the date when the payment being recovered was made until payment.

Time limit for recovery of excessive repayments, etc.

53 (1) An assessment made by virtue of paragraph 52 is not out of time under paragraph 46(1) (general six year time limit for assessments) if it is made--

(a) before the end of the accounting period following that in which the amount assessed was paid, or

(b) if later, before the end of the period of three months beginning with the day on which the Inland Revenue complete an enquiry into a relevant company tax return by the company concerned.

(2) Sub-paragraph (1) above is without prejudice to paragraph 46(2) (time limit for assessment in case of fraud or negligence).

Part VII General provisions as to claims and elections

Claims must be quantified

54 A claim under any provision of the Corporation Tax Acts for a relief, an allowance or a repayment of tax must be for an amount which is quantified at the time when the claim is made.

General time limit for making claims

55 Subject to any provision prescribing a longer or shorter period, a claim for relief under any provision of the Corporation Tax Acts must be made within six years from the end of the accounting period to which it relates.

Supplementary claim or election

56 A company which has made a claim or election under any provision of the Corporation Tax Acts (by including it in a return or otherwise) and subsequently discovers that a mistake has been made in it may make a supplementary claim or election within the time allowed for making the original claim or election.

Claims or elections affecting a single accounting period

57 (1) This paragraph applies to a claim or election for tax purposes which affects only one accounting period ("the relevant accounting period").

(2) If notice has been given under paragraph 3 requiring a company to deliver a company tax return for the relevant accounting period, a claim or election by the company which can be made by being included in the return (as originally made or by amendment) must be so made.

(3) If a company has delivered a company tax return for the relevant accounting period, a claim or election made by the company which could be made by amending the return is treated as an amendment of the return.

The provisions of paragraph 15 (amendment of return by company) apply.

(4) Schedule 1A to the [1970 c. 9.] Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company which cannot be included in a company tax return for the relevant accounting period.

This applies in particular to a claim or election made--

(a) before any notice is given under paragraph 3 requiring a company tax return for the relevant accounting period, or

(b) at a time when its return for the relevant accounting period cannot be amended.

Claims or elections involving more than one accounting period

58 (1) This paragraph applies to a claim or election for tax purposes if--

(a) the event or occasion giving rise to it occurs in one accounting period (the period to which it "relates"), and

(b) it affects one or more other accounting periods (whether or not it also affects the period to which it relates).

(2) If a company makes a claim or election which--

(a) relates to an accounting period for which the company has delivered a company tax return and could be made by amendment of the return, or

(b) affects an accounting period for which the company has delivered a company tax return and could be given effect by amendment of the return,

the claim or election is treated as an amendment of the return.

The provisions of paragraph 15 (amendment of return by company) apply.

(3) Schedule 1A to the [1970 c. 9.] Taxes Management Act 1970 (claims and elections not included in returns) applies to a claim or election made by a company if or to the extent that it is not--

(a) made by being included (by amendment or otherwise) in the company tax return for the accounting period to which it relates, and

(b) given effect by being included (by amendment or otherwise) in company tax returns for the accounting periods aff effect subject to any express provision to the contrary.

(2) Nothing in those paragraphs affects the time limit or any other conditions for making a claim or election.

(3) Where Schedule 1A to the [1970 c. 9.] Taxes Management Act 1970 applies by virtue of any of those paragraphs and the claim or election results in an increase in the amount of tax payable, all such adjustments by way of assessment or otherwise shall be made as are necessary to give effect to it.

Consequential claims, etc. arising out of certain Revenue amendments or assessments

61 (1) Paragraphs 62 to 64 have effect to allow certain claims, elections, applications and notices to be made or given, or if previously given to be revoked or varied, where--

(a) an amendment of a company tax return is made under paragraph 34(2)(b) (amendments of other returns required in consequence of closure notice) which has the effect of increasing the amount of tax payable by a company,

(b) a discovery assessment is made, or

(2) Paragraphs 62 to 64 do not apply in relation to an assessment made in a case involving fraudulent or negligent conduct on the part of--

(a) the company, or

(b) a person acting on behalf of the company, or

In such a case more limited provision is made by paragraph 65.

(3) In paragraphs 62 to 64 "the relevant accounting period", in relation to the time limit for making a consequential claim, election, application or notice, means--

(a) in relation to an amendment of a company tax return under paragraph 34(2)(b), the accounting period in which the closure notice was issued;

(b) in relation to an assessment, the accounting period in which the assessment was made.

Consequential claims etc that may be made

62 (1) A claim, election, application or notice to which this paragraph applies--

(a) may be made or given at any time within one year from the end of the relevant accounting period, or

(b) if previously made or given may at any such time be revoked or varied--

(i) in the same manner as it was made or given, and

(ii) by or with the consent of the same person or persons who made, gave or consented to it (or, if a person has died, by or with the consent of his personal representatives),

unless, by virtue of any enactment, it is irrevocable.

(2) This paragraph applies to a claim, election, application or notice--

(a) relating to the accounting period in respect of which the amendment or assessment is made, or

(b) made or given by reference to an event occurring in that period,

whose making, giving, revocation or variation has or could have the effect of reducing a relevant liability of the company.

(3) The following are relevant liabilities of the company for this purpose--

(a) the increased liability to tax resulting from the amendment or assessment;

(b) any other liability to tax of the company--

(i) for the accounting period to which the amendment or assessment relates, or

(ii) for any subsequent accounting period ending not later than one year after the end of the relevant accounting period.

(4) Where a claim, election, application or notice is made, given, revoked or varied by virtue of this paragraph, all such adjustments shall be made, whether by way of discharge or repayment of tax or the making of amendments, assessments or otherwise, as are required to take account of the effect of the taking of that action on any person's liability to tax for any chargeable period.

(5) The provisions of the [1970 c. 9.] Taxes Management Act 1970 relating to appeals against decisions on claims apply with any necessary modifications to a decision on the revocation or variation of a claim by virtue of this paragraph.

(6) This paragraph has effect subject to--

paragraph 63 (consequential claims etc. affecting tax liability of another person), and
paragraph 64 (consequential claims etc. not to give rise to reduction in liability).

Consequential claims etc. affecting tax liability of another person

63 (1) If the effect of the exercise by any person of a power conferred by paragraph 62 would be to alter the liability to tax of another person, the power may not be exercised except with the consent in writing of that other person or, if he has died, of his personal representatives.

(2) Where such a power is exercised so as to increase the liability to tax of another person, neither paragraph 61 above nor section 43A of the [1970 c. 9.] Taxes Management Act 1970 (which makes corresponding provision in relation to income tax or capital gains tax) applies in relation to any amendment or assessment made because of that increased liability.

(3) In this paragraph "tax" includes income tax or capital gains tax.

Consequential claims etc. not to give rise to reduction in liability

64 (1) If in any case--

(a) one or more claims, elections, applications or notices are made, given, revoked or varied under paragraph 62 in consequence of an amendment or assessment, and

(b) the total of the reductions in liability to tax resulting from that action would exceed the additional liability to tax resulting from the amendment or assessment,

the excess is not available to reduce any liability to tax.

(2) Where sub-paragraph (1) has the effect of limiting either--

(a) the reduction in a person's liability to tax for more than one period, or

(b) the reduction in the liability to tax of more than one person,

the limited amount shall be apportioned between the periods or persons concerned.

(3) The apportionment shall be made in such manner as the Inland Revenue may specify by notice in writing to the person or persons concerned, unless notice is given under the following provision.

(4) If the person concerned gives (or the persons concerned jointly give) notice in writing to the Inland Revenue within the period of 30 days beginning with--

(a) the day on which notice under sub-paragraph (3) is given to the person concerned, or

(b) where more than one person is concerned, the latest date on which such notice is given to any of them,

the apportionment shall be made in such manner as may be specified in the notice given by the person or persons concerned.

(5) In this paragraph "tax" includes income tax or capital gains tax.

Consequential claims in case of fraud or negligence

65 (1) This paragraph applies where an assessment is made on a company in a case involving fraudulent or negligent conduct on the part of--

(a) the company, or

(b) a person acting on behalf of the company, or

(2) If the company so requires, effect shall be given in determining the amount of the tax charged by the assessment to any relief or allowance to which the company would have been entitled for that accounting period on a claim or application made within the time allowed by the Taxes Acts.

Part VIII Claims for group relief

Introduction

66 This Part of this Schedule applies to claims for relief under Chapter IV of Part X of the Taxes Act 1988 (group relief).

Claim to be included in company tax return

67 (1) A claim for group relief must be made by being included in the claimant company's company tax return for the accounting period for which the claim is made.

(2) It may be included in the return originally made or by amendment.

Content of claims

68 (1) A claim for group relief must specify--

(a) the amount of relief claimed, and

(b) the name of the surrendering company.

(2) The amount specified must be an amount which is quantified at the time the claim is made.

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