EIM36870 - Deductions from earnings: capital allowances: procedures: time limits: claims and appeals
Section 205(4) ICTA 1988 and Section 3(1) and (2) CAA 2001
Strictly speaking, capital allowances must be claimed in a self-assessment return (Section 3(1) and (2) CAA 2001). In practice, however, many employees and office holders do not receive a return. You can therefore accept a capital allowance claim by an employee or office holder that is made:
- in correspondence
- by the completion of a form P87
- in a self-assessment return.
If an assessment or self-assessment has become final, capital allowances should not be given for the year in question unless there are grounds for allowing a late claim - see SACM 10035 onwards.
As explained above, the strict legal position is that capital allowances must be claimed in a self- assessment return. The time limits for making or amending a claim to capital allowances are therefore the same as the time limits for making or amending a self-assessment.
Note that the SA time limits do not begin to run until a return is issued. Employees who have not received a return can request one up to 4 years after 31 October following the year concerned (Section 711(2) ITEPA 2003). For example, a return for 2003/04 can be requested at any time up to 31 October 2009.
Claims which are made in correspondence, or in a form P87, may therefore be accepted if they are received at a time when the employee is still within the time limit for requesting a SA return.
For 1996/97 and earlier years, the expenditure must also be notified within the time limit set out in SE36860
Note that the claims procedure in Section 42 TMA 1970 does not apply to claims for capital allowances. This means that if a claim to capital allowances cannot be settled by agreement the only way to bring the dispute before the Commissioners is:
- for 1995/96 and earlier, an appeal against a Schedule E assessment
- for 1996/97 onwards, an appeal against an HMRC amendment to a self- assessment (if the dispute involves a taxpayer who is not normally within SA, they will nevertheless have to complete a self-assessment for the year concerned).