For advisers, discovering that a tax relief claim deadline has been missed can create significant financial, professional and reputational risks. This article explores when HMRC may accept an out-of-time claim, the factors that influence its discretion, and the alternative routes available where relief is no longer available.

Taxpayers can make claims for several different reliefs to reduce their overall tax liability. A tax claim is a formal request to HMRC for a relief, deduction, or repayment provided for by tax legislation, such as loss relief, Business Asset Disposal Relief, gift relief, and overpayment relief.

Such claims are subject to strict time limits, which are an important and necessary aspect of the UK tax system, providing certainty for both taxpayers and HMRC and ensuring claims are made promptly. However, deadlines can sometimes be missed, potentially resulting in significant financial and reputational consequences for taxpayers and their advisers.

For advisers, realising that a claim deadline has been missed can be a difficult and time-sensitive situation. The immediate question is often whether anything can still be done to protect the client’s position, reduce the potential financial impact and manage any wider professional or reputational risk.

The answer is often nuanced and, although the UK tax system imposes strict time limits to make a claim, there are routes of appeal to HMRC’s discretion to allow an out of time claim.

Discretion versus entitlement

It is important to note that once a deadline has expired, there is no longer an automatic right to make a claim, with any decision instead being made through HMRC exercising its discretion. Each late claim is assessed on a case-by-case basis, looking at the specific circumstances which led to the deadline being missed.

Decisions based on discretion do not have a statutory route of appeal so, should a late claim be rejected, the only legal route with which that decision can be challenged is through Judicial Review, which can be a lengthy and expensive process. This makes it even more important that a request for a late claim is presented in the best way possible at the first instance to maximise the chances of success.

For advisers, this makes the first approach to HMRC particularly important. A late claim should not be treated as a routine correction; it needs to be carefully framed, supported by evidence, and presented in a way that explains why the deadline was missed and why HMRC should exercise its discretion.

What do HMRC look for?

The key factor HMRC looks for when assessing whether a late claim for tax relief is accepted is whether the deadline was missed for reasons beyond the taxpayer’s control. Although HMRC provide some examples of what would qualify as reasons beyond a taxpayer’s control, such as illness or incapacity, there is no definitive list of what may qualify. For instance, reliance on an agent can in some cases be sufficient, however this would often also need to be accompanied by other factors which contributed to the mistake.

As such, it is important to ensure that any case is presented in the most appropriate manner, providing a clear narrative on why the deadline was missed and the circumstances which led to this. This can be paired with wider contextual factors on the consequences should the late claim be denied, appealing to HMRC’s sense of fairness and equity.

It is also important to consider how late the claim is being made. The reasons beyond the taxpayer’s control must be present from when the deadline expired until the date the claim was eventually made. Although it is not impossible to make a claim which is significantly out of time, doing so is substantially more difficult.

However, even where a taxpayer cannot satisfy HMRC that a late claim should be accepted, this does not necessarily mean that all options have been exhausted.

What are the alternatives?

Should HMRC refuse to accept a late claim, there may be other mitigation routes available, depending on the circumstances.

Special relief is available in exceptional cases where it would be unconscionable for HMRC to seek collection of an amount that would otherwise not be due. Although this relief is only available in limited circumstances, it can provide an important safety net where a taxpayer is unable to obtain relief through the normal claim process.

In other cases, where an HMRC enquiry results in adjustments to a taxpayer’s position, consequential amendments may be available. These provisions can allow otherwise expired time limits to be extended to allow the taxpayer to make a claim that would have been available to them had the corrects facts been known at the time.

Finally, where no mechanism exists to reduce or eliminate the liability itself, it is possible to agree a Time to Pay arrangement with HMRC to settle any outstanding liabilities over an agreed period. Although this does not alter the underlying tax position, it can provide valuable breathing space for a taxpayer facing an unexpected liability following the rejection of a claim.

How can we help?

If you are advising a client where a claim deadline may have been missed, and you are looking to make an out of time claim to HMRC, acting quickly is important. The sooner the position is reviewed, the easier it is to assess whether an out of time claim may be possible, identify the evidence needed, and consider any alternative routes available.

Our specialists can support advisers and their clients by reviewing the circumstances, identifying the most appropriate route forward, and preparing detailed representations to HMRC. Where a late claim is not possible, we can also explore alternative mitigation strategies, including special relief applications, consequential amendments, and Time to Pay arrangements.

If you or your client has missed a deadline, get in touch with our specialist team using the form below to discuss the circumstances.