Take these steps if you think you’ve paid too much tax

Reclaiming overpaid tax with overpayment relief

As the saying goes ‘mistakes happen’ and tax is no exception. A mistake in your tax return may mean you previously overpaid tax.

If the error is noticed quickly, legislation is in place to allow an individual to amend a tax return within 12 months of the usual filing date for the tax return; so, to amend the 2022/23 tax return, the deadline is 31 January 2025.

The deadline for companies is 12 months of their usual filing date.

If this deadline has passed, overpayment relief was introduced from 1 April 2010 and is a mechanism for making a claim outside of the tax return where income tax, class 4 NIC or capital gains tax has been overpaid or assessed.

Overpayment relief is also available for companies to reclaim overpaid corporation tax.

What is the time limit for making an overpayment relief?

The normal time limit for a claim is 4 years from the end of the relevant tax year. For example, if you want to make a claim for overpaid tax for the year ended 5 April 2020, the deadline is 5 April 2024. For companies, the time limit is 4 years after the end of the relevant accounting period.

How is an overpayment relief claim made?

Overpayment relief must be claimed in a specific manner:

Claims must be made in writing and:

• State that the person is making a claim for overpayment relief.
• Identify the tax year for which the overpayment or excessive assessment has been made.
• State the grounds on which the person considers that the overpayment or excessive assessment has occurred.
• State whether the person has previously made an appeal in connection with the payment or the assessment.
• If the claim is for repayment of tax, they must have documentary proof of the tax deducted or suffered in some other way, as they may be required to provide it at a later date.
• Include a declaration signed by the claimant stating that the particulars given in the claim are correct and complete to the best of their knowledge and belief.
• State the amount that the person believes they have overpaid.

HMRC will reject the claim if it is not in the correct format.

Overpayment relief can be denied, and here’s why

The claim can also be rejected for other reasons. These include where the amount in the claim arises from a mistake concerning any other claim or election, where there is another method to correct the overpayment, or where the original amount was calculated in accordance with the generally prevailing practice at the time. This means if the interpretation of the law changed at a later date, you cannot rely on this to make a claim.

HMRC can also enquire into the claim before giving the relief.

What if I have an overpayment relief claim that falls outside the time limit?

HMRC may consider a late claim depending on individual circumstances.

The most likely late claim to succeed is under Extra-statutory concessions (ESC) B41, which will come into play if the claim is late due to an error by HMRC or another government department.

What is Special Relief?

Special relief is a form of overpayment relief that only applies where HMRC has made a determination of tax due.

It is particularly challenging to claim as there are strict conditions that must be met, the main one being that it would be ‘unconscionable’ for HMRC to seek to recover an amount of tax or refuse repayment of tax already paid.

Unlike normal overpayment relief claims, there is no time limit to apply for special relief. The claim must include information or document reasonably required to show the conditions are met.

What should I do if I think I have made a mistake and overpaid tax?

Making a claim for overpayment relief is fraught with complexities, so we recommend that you contact us. Our specialists can discuss your specific circumstances and develop a plan of action with you. This also provides a useful dialogue to answer any questions you may have about the wider financial situation.