Normally, you have four full years in which to submit a Tax return. If you miss that deadline then you cannot submit a return and you will miss any refund that you may be due. That is, until Mr Higgs (“H”) came along.
H thought that he was going to be a bit late in submitting his tax return so, in order to avoid interest and penalties, he decided to make a substantial payment on account. In fact, he was very late in submitting his return and missed the four-year deadline. Accordingly HMRC refused to process the return.
Unfortunately for H the actual tax liability shown on the return was substantially lower than the amount that he had paid. As HMRC refused to process the return they did not recognise the overpayment and so refused to make any repayment. H decided to challenge this ruling at Tribunal and, somewhat surprisingly, he won! As a result of this decision by the Tribunal you can now go back to the beginning of self assessment in 1996/97 and obtain refunds that were previously considered out of date by filing a return. There are a number of circumstances under which HMRC will still to refuse to process a return, namely if:
- HMRC has issued a determination for the year in question, or
- The overpayment is a result of amending or adjusting a return, or
- HMRC did not require a return to be submitted for that year
Therefore, submit a return and make a mistake – no repayment out of time. But ignore your responsibilities completely then you can get a repayment out of time. How fair is that? Answers to your MP please and not to us.
This has all arisen through a flaw in the legislation. Feeling a bit miffed, HMRC and the government acted quickly to plug what they saw as a gap to be exploited. Therefore, if you think that you can use this “Higgs Loophole” for your own advantage make sure that you do so before 5th April 2017.
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