SE36870 - Deductions from emoluments: capital allowances: procedures: claims and appeals
Section 205(4) ICTA 1988 and Section 3(1) and (2) CAA 2001 (previously, Section 140(3) and (4) CAA 1990)
Claims
Strictly speaking, capital allowances must be claimed in a tax 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
- either, a successful claim is made under the error or mistake provisions in Section 33 TMA 1970 (see IM3750 onwards)
- or, a late appeal against an assessment is accepted under Section 49 TMA 1970 (see AP3396).
Time limits
As explained above, the strict legal position is that capital
allowances must be claimed in a tax 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 return.
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 5 years after 31 October following the year
concerned (Section 205(4) ICTA 1988). For example, a return for
1998/99 can be requested at any time up to 31 October 2004.
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.
Appeals
Note that the claims procedure in Section 42 TMA 1970 does not apply to claims for capital allowances within Schedule E. 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 a Revenue 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).
