2. Mr O complains that HMRC would not allow him to make an amendment to his 2015/16 tax self assessment citing that he was outside of the time limit to do so.
3. He says that as a result, he incorrectly paid a significant sum of tax which has caused him financial loss and distress.
4. Mr O wants HMRC to reimburse the tax he paid with interest.
5. Mr O was a director of a limited company. But after a dispute, he left the company in early 2016 and resigned as a director. However, he kept a share in the company. Prior to his resignation in that tax year, Mr O had received payments of around £200,000. He assumed the company would file these as dividends but did not get any confirmation of this.
6. In his self assessment for the 2015/16 tax year, Mr O declared dividends of £200,000 and paid over £40,000 in tax to HMRC.
7. There was no further activity until February 2022, when Mr O received a letter from the company saying it wanted to buy his share for £229,992. It said this figure was equivalent to what was in his overdrawn loan account. This meant the company did not declare the money he took from it in 2015/16 as dividends, as per Mr O’s declaration to HMRC.
8. The company offered Mr O the equivalent of the money in the loan account in return for his share. He accepted the offer and this was also subject to tax.
9. Mr O wrote to HMRC on 14 June 2022 and explained the above. He asked HMRC to return the tax he had paid on the dividend he declared. He felt that if he paid tax on the new monies he received, he would essentially be paying tax twice.
10. HMRC responded and said there was time limit of four years for someone to make an amendment to their tax return. This meant Mr O had until 2020 to do so. And as he raised his dispute in 2022, it could not take any action.
13. Before we decide if we should investigate a complaint, we look at whether there are signs the organisation concerned has got something wrong. We do this by comparing what should have happened with what did happen.
14. In 2022, Mr O asked HMRC to amend a tax return he made for the 2015/16 financial year. HMRC replied and told him that he was outside of the four year time limit to do this. As a starting point, this was the appropriate advice in line with the manual.
15. Mr O then asked HMRC to waive its time limit given his individual circumstances. He believed an honest mistake had been made where he declared his income as dividends, but the company did not declare them as such in the relevant tax year. Mr O told HMRC he would essentially be paying tax twice after selling his share in the company in 2022.
16. HMRC considered the information Mr O provided and decided not to put the time limit to one side. It said that in line with its claims manual, it could not waive the time limit where (as well as other reasons) the reason for the amendment was substantially because of an oversight or negligence on the part of the person, their agent or adviser. The claims manual does state this so HMRC provided the appropriate information.
17. Mr O wanted to amend his tax return because he had ultimately made a mistake on it and declared income as dividends, when it was not. Therefore, it appears the reason for the amendment was because of an oversight on his part. And the guidance states HMRC cannot waive the time limit in these circumstances.
18. Therefore, HMRC has appropriately applied its guidance and considered the induvial circumstances of the case. This is what we would have expected HMRC to do. As such, we have decided not to take any further action. We appreciate that this is not the outcome Mr O wanted and recognise that the events did cause him distress.
1. We have carefully considered Mr O’s complaint about HMRC. It appears that HMRC appropriately applied its time limit to Mr O’s request to amend his 2015/16 tax return and explained the reasons why it could not make any amendments. We were sorry to hear of the circumstances surrounding the complaint and the distress Mr O experienced.