< Go Back Special Relief Posted: Sep 3, 2015 Special Relief applies in cases where it would be
unconscionable for HMRC to seek to recover an amount of tax or refuse
repayment (if already paid). This is often overlooked in cases where four years have passed but, despite the hoops, it remains a useful tool. Special relief paragraph 3A schedule 1AB Taxes Management Act 1970:
this relief replaced the former concessionary equitable relief practice
of HMRC from 1 April 2011. This statutory relief only applies in a set of
strictly defined circumstances, summarised as:
Tax is due because HMRC has made a determination of tax due, in the event that an individual has not filed self
assessment tax return in response to notice requiring a tax return. The individual is time barred from claiming relief, as more than
four years have elapsed and HMRC have commenced debt collection
proceedings. Provided that three conditions are met:
Condition A : in the opinion of the Commissioners it
would be unconscionable for the Commissioners to seek to recover the
amount (or to withhold repayment of it if has already been repaid).Condition B: that the person's affairs (as respects
matters concerning the Commissioners) are otherwise up to date or
arrangements have been put in place, to the satisfaction of the
Commissioners, to bring them up to date so far as possible.Condition C : either:(a) the person has not relied on this paragraph on a previous
occasion (whether in respect of the same or a different determination or
tax), or (b) the person has done so, but in the exceptional circumstances of
the case should be allowed to do so again on the present occasion then HMRC may give relief if it would be in-conscionable not to. Recent cases
In J Clark v CRC (2015) TC04509 ,
the tribunal allowed special relief: the taxpayer had special needs and
was let down by HMRC. In allowing the appeal it cited the
earlier decision in Donald Fitzroy Currie v HMRC [2014] TC 03997 (see below) which
stated that unconscionable meant “not in accordance with what is right
or reasonable … unreasonably excessive … grossly unfair, especially to a
weaker party … acting without regard for what is right.”, it found that
HMRC’s responses to correspondence were not satisfactory given the
specificr needs of the individual.
In Donald Fitzroy Currie v HMRC [2014] TC 03997
a taxpayer was denied special relief in appealing determinations out of
time by HMRC, on appeal to the Tribunal he changed his evidence and the
presence of substantial asset meant that the tribunal thought it likely
that all his income was not assessed. In making its decision the Tribunal set
out exactly what powers it has in relation to a decision by HMRC to
refuse special relief.
What a Tribunal will review: Whether HMRC opinion is ‘unreasonable’, in a judicial review sense,
based on the evidence available to the HMRC officer at the time the
decision was made. (New evidence put before the tribunal will therefore
not be considered) An ‘unreasonable’ decision is strictly defined, as being one which ‘no reasonable person acting reasonably could have made’ (per Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223) What a Tribunal will not review:
Whether it is ‘unconscionable’ for HMRC to enforce recovery of estimated tax bills The HMRC officer’s ‘best judgment’ as to what the estimated tax bill should be In William Maxwell v HMRC [2013] TC02849 the
taxpayer's accountant died before finishing his tax returns for 2006/07 and
2007/08. HMRC issued determinations and returns were eventually filed
by another agent in 2012, but the taxpayer was out of time to appeal.
Appealing to the First Tier Tax Tribunal the taxpayer said
that he did not know that his accountant was ill and was a pensioner who
always relied on his accountant and thought his affairs were up to
date. HMRC said that they had sent out a stream of penalty letters to the taxpayer. The taxpayer's representative told the Tribunal that HMRC had allowed
special relief in another case affected by the agent's death and they
could not understand why it was not being granted in this case. The Tribunal allowed special relief for Mr Maxwell.
Sometimes all is not lost and a thorough review of the evidence and circumstances surrounding a situation could bring about a welcome reversal for a client. If you have any issues connected to claiming relief from excessive determinations please contact us .