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A Claim for Special Relief – What is it and when does it apply?

Posted on 15 Jul 2024, by Liam Chalmers

A Claim for Special Relief – What is it and when does it apply?

If HMRC issues you a notice to file a Self-Assessment tax return for Income Tax, or Corporation tax, but you fail to submit one, HMRC has the power to raise a Revenue Determination for the tax it believes is due, based on the information it holds. This determined sum then becomes legally payable, even if it is incorrect.

A Revenue Determination can only be displaced by the submission of a Self-Assessment tax return, either within three years of the filing date for the relevant tax return, or 12 months after the date of the Revenue Determination – whichever is later. So, if you receive a Revenue Determination that you disagree with, you can tell HMRC what the correct tax is by sending in a return providing that you are in time to do so.

But what about if you are outside of the time limits to submit a Self-Assessment tax return to displace a Revenue Determination?

Special Relief: A final chance…

Special Relief is intended as a final and exceptional remedy where it would be unconscionable (unreasonable) for HMRC to pursue tax that it has determined, even though it is legally due. HMRC has a duty to both Parliament and taxpayers to collect tax due under tax law and to ensure that the tax system is operated fairly. As a result, HMRC will not accept a claim for Special Relief simply because the tax liability is deemed by the taxpayer to be incorrect or excessive.

What Qualifies as Unconscionable?

Assuming that you have not previously claimed Special Relief, and that your tax affairs outside of the disputed Revenue Determinations are up to date, then the success of the claim for Special Relief is determined by whether it would be deemed unconscionable (i.e. totally unreasonable) for HMRC to pursue the determined tax liability.

What qualifies as ‘unconscionable’ is not listed in legislation, so claims are considered by HMRC on a case-by-case basis. As well as demonstrating that the tax is wrong, at a minimum, you must be able to evidence that you were not capable of being able to manage your tax affairs during the relevant period, so it would be unfair for HMRC to enforce the determined liability. It is important to note that the ‘relevant period’ not only covers the tax years which have been determined, but it also covers the period that followed the Revenue Determination where you would have still been in time to displace it with a Self-Assessment tax return.

If you can demonstrate that the tax that HMRC has determined is incorrect, as well as show why you were unable to displace the determination with a tax return in time, you may qualify.

Success Story – a successful HMRC claim for Special Relief

We recently helped a client achieve a successful claim for Special Relief, saving more than £40,000 in excessive Income Tax that HMRC had determined over three tax years.
Although the Revenue Determinations in this case were very clearly excessive and, in our opinion, had been raised to scare our client into acting, this would not have been enough on its own for the claim to have been accepted by HMRC.

We were able to gather enough evidence to show that the tax determined was clearly too high, as well as demonstrate how our client’s specific circumstances had prevented them from being able to submit a return on time. HMRC accepted the claim. Presenting such a claim clearly, and with sufficient evidence, is key to a good outcome in these situations.

Present a Strong Case

Being a final and exceptional remedy, it is crucial that your claim for Special Relief is presented to HMRC as strongly as possible by an advisor who is experienced in this field.
If you believe that Special Relief may apply to your dispute with HMRC, please get in touch with our friendly, experienced team for a free, no obligation initial consultation.

How Can inTAX Help?

You can get in touch with our friendly and experienced team on: 0203 675 8122 or email jeremy.johnson@intaxltd.com.

inTAX is a specialist tax disputes firm. We deal with disclosures, investigations, and tax enquiries of all descriptions, including COP9, fraud investigations, VAT fraud, tax avoidance, let property disclosures and tribunal appeals. But we don’t just deal with the serious end of tax investigations; we are also happy to handle smaller enquiries, disputes and problems that can be equally as worrying for our clients.