COM53030 - Claims / reliefs: other reliefs: giving relief in respect of a mistake in a return

Background 

Paragraph 51 Sch 18 FA 98 says that, subject to certain conditions, ‘A company which believes it has paid tax under an assessment which was excessive by reason of some mistake in a return may make a claim for relief’.

If you agree, and the conditions set by Para 51 are met, you ‘give by way of repayment such relief in respect of the mistake as is reasonable and just’.

Using COTAX to give the relief 

• Use the Process a Claim option in Function RAMA (Record / Amend Assessment) to give the relief for the relevant accounting period
• Enter the amount of the relief in the ‘Non standard red’n’ field that appears immediately before the ‘Net tax payable’ field
• Enter an appropriate message in the ‘Free Format Message’ field, such as - ‘Mistake Relief under Paragraph 51 Finance Act 1998
• Complete the function

Note: Before you enter the relief in RAMA, think about the repayment consequences.

Processing the claim for relief will normally create an overpayment on the accounting period record. COTAX handles most overpayments for an AP automatically providing certain conditions exist on the AP. See ‘Overpayments: Automatic Process’ (COM120001) in the ‘Repayts/Reallocs’ business area.

However, if there are any underpayments on the company record COTAX will reallocate rather than repay the overpayment. You should consider the full circumstances of the case, and if necessary, write to the company to tell it how the relief will be handled and what repayment (if any) it will receive.

For a list of forms relevant to this subject, see COM53011.

For a list of functions to use in particular situations, see COM53012.

For legislation applying to this subject, see COM53013.