UT/2024/000060 - [2025] UKUT 00143 (TCC)

As the SP itself explains (in its paragraph 2) it covers loss relief claims to be made within two years of the accounting period in which the loss is incurred. For capital allowances and group relief there is a one year time limit from the filing date but if HMRC open an enquiry into the return the taxpayer has the later of 30 days from after the enquiry closed, or if the return is amended, 30 days after the amendment, or 30 days after appeal against the amendment is finally determined. In both cases (whether there is simply a two year time limit or a time limit that is tied to the enquiry closing or final determination of appeal) HMRC have discretion to extend the time limit.

Both parties acknowledge that the Statement of Practice does not however actually cover claims to set off NTLRD. Rather, as described above, it concerns the making of amendment of claims to carry back losses claims for capital allowances and claims for group relief. Nevertheless both parties accept that the statutory provisions in respect of time limits are similar and that the approach in the SP is instructive and should be applied.

HMRC had previously argued that it was a complete answer to the Deficit Claim that the SP did not apply to the Deficit Claim. This argument was (rightly in our view) not pursued in oral argument. As will be seen the Decision was expressed to be made on the basis of and by reference to the SP, and we cannot see that it would have been open to HMRC now to assert that the Decision did not need to be made in accordance with the SP.

Although we will make reference to excerpts of the SP when addressing the individual grounds it is helpful to see the paragraphs dealing with HMRC’s exercise of its discretion in their entirety (in setting this text out we have indicated the parts of particular relevance to particular grounds).

“The Commissioners for HMRC’s approach to extending time limits for making claims

9.

The time limits allowed for making claims to loss relief, capital allowances and group relief under CTSA and the further provisions described above should generally be adequate and the Commissioners for HMRC will not make routine use of their powers to accept claims made outside these limits. But the Commissioners for HMRC recognise that there may be exceptional reasons why a claim is not made within the time specified. Applications to allow further time in accordance with the powers referred to at paragraph 1 above will be considered with the assistance of the following criteria.

10.

In general, the Commissioners for HMRC’s approach will be to admit claims which could not have been made within the statutory time limits for reasons beyond the company’s control. This would include, for example, cases where:

• at the date of the expiry of the time limit, the company or its agents were unaware of profits against which the company could claim relief [This is the subject of Ground One and we refer to this bullet as Example One]

• the amount of a profit or loss depended on discussions with an Inspector which were not complete when the time limit expired, and the delay in agreeing figures is not substantially the fault of the company or its agents. [This is the subject of Ground Two and we refer to this bullet as Example Two]

In such cases the Commissioners for HMRC’s approach will be to admit late claims up to the amount of the profit or loss in question. Where the claim involves the withdrawal of an existing claim and the making of a fresh claim, the Commissioners for HMRC’s approach will be to admit these to the extent of the profit or loss in question. Claims which go beyond this and affect profits which were not in dispute at the time of expiry of the statutory time limits will not be within this approach.

Reasons beyond the company’s control would also include a claim where all of the following 4 features were present:

• an officer of the company was ill or otherwise absent for a good reason

• the absence or illness arose at a critical time and prevented the making of a claim within the normal time limit

• there was good reason why the claim was not made before the time of the absence or illness

• there was no other person who could have made the claim on the company’s behalf within the normal time limit.

11.

The Commissioners for HMRC would not, however, regard the following as reasons beyond the company’s control:

• oversight or negligence on the part of a Claimant company or its agent

• failure, without good reason, to compute the necessary figure the wish to avoid commitment pending clarification of the effects of making a claim

• illness or absence of an agent or adviser to the company

12.

There may be cases falling outside the general approach outlined in paragraph 10 where it would nevertheless be unreasonable, given the overall circumstances of the case, for the Commissioners for HMRC to refuse a late claim. It is likely that such cases will involve a combination of factors, but the following criteria may be relevant:

• the reason why a claim is late – where the reason does not in itself warrant admission of the claim under the approach outlined above, it will still be taken into account by the Commissioners for HMRC in assessing the circumstances as a whole

• the extent to which it is late

• the consequences for the company if the claim is refused

• any particularly unusual features

For the purpose of this paragraph and those above, if the late claim forms part of a scheme or arrangement, the main purpose or one of the main purposes of which is the avoidance of tax (including the payment of tax), then that will be taken into account in the Commissioners for HMRC’s approach.

Procedures

13.

An application to admit a claim outside the statutory time limits should be sent to the inspector dealing with the Claimant company and should include a full explanation of the circumstances of the case. The explanation should cover, but need not be limited to, all the criteria set out in paragraph 12.

The application should be made as soon as possible. Delay in making a late claim after the circumstances which caused the claim to be late have ceased to apply may result in the claim being rejected. [This paragraph is the focus of Grounds 4 and 5]”