What is Overpayment Relief

At a glance, overpayment relief is a claim one can make as a taxpayer if they realise that they have overpaid their tax. Overpayment relief can be claimed within 4 years from the end of the tax year to which the claims pertains.

Under what circumstances can you make an overpayment relief claim?

As a taxpayer, if you have paid a certain amount of corporation tax, capital gains tax or income tax, which you now believe was not due to begin with, you can make an overpayment relief claim to HMRC.

If the tax has been assessed but not paid, you can make the claim for the amount of tax assessed to be waived off.

Under specific circumstances, an overpayment relief claim may not be entertained by HMRC.

For example, if the overpayment was a direct result of a mistake in a claim, election or notice, or an error in calculating the claimant’s liability (where the liability was calculated according to the practice prevailing at the time) – overpayment relief may not be granted.

A claim may also not be accepted if, for instance, the claimant sought relief by taking additional or other steps under tax legislation, or if the claim was made on grounds already established through a court or tribunal during an appeal.

From the year or period for which the tax was assessed or the payment made, companies have up to 4 years to make an overpayment relief claim. Any claims made will not be included in a tax return.

Just to quickly reiterate, an overpayment relief claim can be made under two circumstances:

• HMRC says that you owe them more tax than you have already paid, which you disagree with;
• You did, in fact, paid more tax than was due owing to a mistake or error made while calculating your tax return.

Here’s a quick example to demonstrate when you can make a claim for overpayment relief:

You completed your tax return in the last 4 years but did not include all work related expenses on the original tax return. In this case, you can make an overpayment relief claim to get the tax relief you are rightfully entitled to.

What to include on your claim

You can make overpayment claims within four years of the end of tax year for which you paid (or overpaid, in this case). This needs to be submitted in writing to HMRC and must include:

• The reason for submission, highlighting any mistakes HMRC made while calculating your tax return.
• Written evidence to show the amount of tax mistakenly paid.
• The total amount of tax and Class 4 NICs incorrectly calculated by you or HMRC.
• The tax year in question.
• Inclusion of the phrase “This claim is being made under Paragraph 51, Schedule 18, Finance Act 1998”, if your claim pertains to CT (Corporation Tax).
• Inclusion of the phrase “This claim is being made under Schedule 1AB Taxes Management Act 1970”, if your claim pertains to Income Tax or CGT (Capital Gains Tax) overpayments.
• Any appeals you have made regarding the overpayment or incorrect calculation.
• A declaration that the information you have provided in the claim is fully accurate and to the best of your knowledge.

Start your overpayment relief claim

Dealing with HMRC directly can be a very daunting and time-consuming process for nearly all business owners. The friendly attorneys at Adam Accountancy can help you make a smooth overpayment relief claim, ensuring that you have genuine grounds for repayment.

They will sit down with you to assess your tax dues, complete all the necessary paperwork on your behalf and correspond with HMRC, ensuring that you submit a fully accurate and evidenced claim.

Our friendly financial adviser is only a phone call away: 01753 373505 or  Get in touch with us for free initial consultation now.

Another useful link from HMRC  Can be found here.