In The Queen (on behalf of Andrew Michael Higgs) v HMRC [2015]  UKUT 0092 (TCC) HMRC refused to repay an overpayment of tax following late filing of a tax return, claiming that the four year limit prevented repayment. The Upper Tier Tribunal decided that no time limit applied in the circumstances.

Mr Higgs 2006/07 tax return was not filed until 2 November 2011, due to a series of misunderstandings. He had made payments on account of £46,317 for that year however his actual tax liability was £18,830, leaving an overpayment of £27,487.

  • HMRC should have repaid his overpayment under s 59B(1) TMA 1970 automatically as it did not make any enquiries into the return under s.59B(4A).
  • HMRC refused to process the return and refused repayment saying that the return outside the four year time limit.
  • The case went to judicial review.

There had been an earlier decision from the High Court on this matter; in Morris & Anr v HMRC [2007] EWHC 1181 (Ch), it had been decided that the four year time limit for assessment provided by TMA 1970 s.34(1) did not apply to self-assessment, only to assessment by HMRC.

  • The UT found that four year time limit accordingly did not apply to Mr Higgs’ tax return.
  • In case the decision was challenged by HMRC, the UT also considered whether in a case like this HMRC should have exercised its discretion to ignore the time limit as part of its powers under the care and management of taxes and it concluded "the matter should be remitted to HMRC for them to give full and proper consideration to whether it would be appropriate to exercise their discretion to extend the time limit so as to permit the Claimant's self-assessment and repayment claim to be processed."


HMRC may yet appeal this decision. However the decision may be of limited use, affecting only taxpayers who have failed to file tax returns: 

  • S34 TMA 1970 imposes a four year time limit for assessment by HMRC and s36 imposes a six year time limit in the event of carelessness by the taxpayer. Both these limits apply only to assessment by HMRC.
  • Where a taxpayer has submitted a tax return and made an error leading to an overpayment of tax, Sch 1AB TMA 1970 overpayment relief sets a four year limit.
  • In Mr Higgs situation overpayment relief did not apply because the taxpayer’s return was correct.


Small print and links

The case: Higgs v HMRC [2015]  UKUT 0092 (TCC)

The Legislation:  Section 34(1) Taxes Management Act 1970 ("TMA") provides as follows:

34 Ordinary time limit of 4 years

(1) Subject to the following provisions of this Act, and to any other provisions of the Taxes Acts allowing a larger period in any particular class of case, an assessment to income tax or capital gains tax may be made at any time not more than 4 years after the end of the year of assessment to which it relates...

Section 36 provides
(1) An assessment on a person in a case involving a loss of income tax or capital gains tax brought about carelessly by the person may be made at any time not more than 6 years after the end of the year of assessment to which it relates (subject to subsection (1A) and any other provision of the Taxes Acts allowing a longer period)."

Back to Nichola's Tax Update 28 April 2014