Special Relief is a form of Overpayment Relief which can only apply to amounts charged in HMRC determinations for income tax or corporation tax self-assessments where no other statutory remedy is available. There is no time limit for claiming Special Relief.
A person who has received a notice to file a return must do so by the filing date. If they don’t, HMRC can issue a determination of the tax due. That tax is then legally due to be paid. There is no right of appeal against a determination. Sending in a Tax Return within the time limit will displace the determination. However, if these time limits are passed a person may claim Special Relief if:
- HMRC have made a determination; and
- the person is out of time to make a return; and
- they are unable to claim Overpayment Relief.
Unlike claims to Overpayment Relief, Special Relief is not automatically excluded whenever:
- A person ought to have known that they had some other means of correcting an overpayment or over-assessment, but they failed to use those other means within the relevant time limit; or
- HMRC has already taken court action to recover amounts due under a determination, unless the person was present or was legally represented during the proceedings, or an agreement was reached to settle the proceedings.
However, the following strict requirements must be satisfied:
- In the opinion of the taxman it would be “unconscionable” for HMRC to seek to collect the tax charged, or refuse to repay it if it has already been paid; and
- The person’s tax affairs are otherwise up to date, or arrangements have been made to the satisfaction of HMRC, to bring them up to date; and
- The person has not previously claimed Special Relief or its predecessor: Equitable Liability – whether or not relief was given. This may be disregarded in exceptional circumstances.
The taxman defines “unconscionable” as meaning “completely unreasonable” or “unreasonably excessive”. In considering whether something is unconscionable HMRC will look at what behaviour it expects from any reasonable person in a similar situation. HMRC say it would only be “unconscionable” to seek to collect the tax charged in the following exceptional circumstances where taxpayers:
- are suffering from a temporary or sporadic illness, and as a result find it particularly difficult to deal with the tax system; or
- have not received notices or other communications for reasons outside their control; or
- are insolvent and pursuing the amount in the determination would be to the detriment of other creditors.
For a claim to Special Relief to be successful, it must, among other things, explain why the taxpayer considers that it would be unconscionable for Her Majesty’s Revenue & Customs to recover the full amount charged by a determination. HMRC say Special Relief will not normally apply where taxpayers:
- are registered self employed and close the business but don’t tell HMRC;
- cease self employment and move but don’t provide a forwarding address;
- are subcontractors who suffer deductions under CIS and, believing they have nothing further to pay, do not respond to determinations and other contacts.
- are negligent and, although aware of their responsibilities to pay tax and to file returns on time, fail to act appropriately in relation to their tax affairs, and ignore all communications sent to them.
A Special Relief claimant must
- confirm that their tax affairs are otherwise up to date, or
- make arrangements with HMRC to bring any other outstanding matters up to date.
Fixed penalties for late delivery of an SA return are still payable following a claim for Special Relief. Any daily penalties imposed for non delivery of a Self Assessment return are also not disturbed by a claim for Special Relief; even when the revised tax is reduced to nothing. But if daily penalties are disproportionate to the amount payable, then they can be disputed outside the Special Relief Claim process.
How can Lynam Tax dispute specialists help?
If you need to make a claim to the taxman then expert help from Lynam Tax dispute Experts might make the difference between a successful claim and a refusal from the taxman.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997
or Andrew Nutbrown on 07718 778710