Higgs case and s 34(1) time limits

Higgs Case HMRC revise their internal guidance on late returns

The Upper Tribunal has held that a self-assessment tax return submitted by a taxpayer more than four years after the tax year to which it related should be accepted by HMRC and that the time limit in TMA 1970 s 34(1) has no application to a self-assessment. Therefore HMRC could not rely on it to refuse to accept the return. The return in question resulted in a repayment of tax being due to the taxpayer. HMRC have not appealed against the decision in R (oao Higgs) v HMRC [2015] UKUT 92.

The case was covered by Keith Gordon in May 2015’s Tax Adviser (‘The four-year hitch’, p36), where it was suggested that taxpayers should revisit ‘late’ returns rejected by HMRC on the basis of the four-year rule.

As a result of Higgs, we understand that HMRC have revised their internal guidance. The internal guidance says HMRC will now accept a ‘late’ self-assessment return for any year from 1996/97 if it meets the following criteria and if there is an overpayment of tax or a reduction in payments on account. These are where:

  1. The return has been requested by the issue of a notice under TMA 1970 s 8;
  2. No determination has been raised for the year of return;
  3. It is an original return and not an amended return.

Thus, although Higgs does not provide authority for this view, HMRC are drawing a distinction between returns submitted pursuant to a TMA 1970 s 8 notice and unsolicited returns and amendments to returns.

We also understand that HMRC are refusing to process late returns received before the date of the Higgs decision (11 March 2015).

We have asked HMRC to provide a statement for our members on their interpretation of Higgs and will provide a further update in Technical Newsdesk.