In HMRC v Dundas Heritable [2019] UKUT0208 the Upper tribunal agreed with the FTT; Schedule 18 of FA 1998 does allow a taxpayer to make late capital allowance claims if there is an open HMRC enquiry into the relevant tax return.
Under paragraph 79 of Schedule 19 FA 1998 capital allowance claims must be made as part of the corporation tax return and are therefore subject to the same time limits for filing and amendment as the return itself.
Dundas, a pub and bar operator, submitted late corporation tax returns, including Capital allowance claims, for the two years ending 31 March.
- HMRC opened enquiries into each return, in time, disallowed the capital allowance claims on the grounds that they were made out of time, and issued closure notices. The company appealed.
- The FTT found that, as an enquiry had been opened, the claims were possible, and made in time by virtue of paragraph 82(1)(b) of Schedule 18, even though the claims were not made within the time limits at paragraph 82(1)(a).
- HMRC appealed saying a late claim was not a claim at all, using the analogy of an offside goal not being a goal at all.
The UT upheld the FTT decision, saying the words of paragraph 82(1) are clear and unambiguous and mean that a claim for capital allowances may be made at any time up to 30 days after an enquiry into the tax return of the claimant company for the accounting period for which the claim is made.
The tribunal also said, following HMRC counsel's train of thought, that an offside goal remained a goal even if disallowed, it was simply one made from an offside position; likewise a late capital allowance claim was still a claim.
In opening the enquiries into the returns HMRC had effectively validated the out of time capital allowance claims, yet, absent any enquiries the claims would have been accepted anyway as part of the self-assessment made by the company.
Links to our guides:
Plant & machinery (companies): allowances
Time limits for making claims & adjustments
Time limits for tax assessments, claims and refunds
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