This is of interest to any client which has made statutory claims - i.e., (i) claims through tax returns including by amendment, (ii) claims for DTR under s.806(1) ICTA 1988 or (iii) 'error or mistake' claims under (old) para 51 of Sch 18 FA 1998. Note that this also includes claims for credit for WHT, which the FTT has now held (contrary to HMRC's approach to date) fall to be construed as implying a claim for credit for ULT at the foreign nominal rate.
Why does this decision make a difference?
The decision is considerably more favourable, in a number of respects, than HMRC's Brief issued in January 2020 (which was the previous basis on which HMRC had been prepared to pay out on these claims). The FTT has endorsed a practical, broad-brush approach to claims, and has rejected HMRC's legalistic approach. In particular, the FTT construes purported out-of-time amendments (made later than 12 months after the filing date) as valid s.806(1) DTR claims and/or as valid para 51 'error or mistake' claims, provided made within the 6-year time limit for the latter. Further, it holds that consequential claims for 'eligible unrelieved foreign tax' ('EUFT') fall within s.806(2) (s.79 TIOPA), under which the time limit is 6 years from the date of HMRC's adjustments (i.e., 6 years from closure of the enquiry).
What needs to be done?
This means clients would be well advised to comprehensively review all of their claims. Many claims previously thought to be out of time are now likely to be in time, and clients with open enquiries and claims are likely to be entitled to claim back more money than they previously thought. Where enquiries have been closed, clients also need to consider what s.806(2) ICTA /s.79 TIOPA consequential claims they can make.
How can we help?
This presents an important and timely opportunity to clients to review their claims to determine the impact and likely repayments due to them, and for example to ensure that they haven't missed anything they're still entitled (and in time) to claim.
For further information, please contact Peter Halford and Ben Thomas in the Tax Disputes team.