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Upper Tribunal accepts reasonable excuse defence for late claim for repayment of tax

23 December 2015

In Raftopoulou v HMRC [2015] UKUT 579, the Upper Tribunal (UT) has confirmed that a taxpayer can make a valid claim for repayment of overpaid tax ...

… notwithstanding expiry of the statutory time limit for making such a claim, if the taxpayer has a reasonable excuse for late filing.


Dr Raftopoulou (the taxpayer) submitted her 2006/07 self-assessment return on 14 January 2008. According to the return, a liability of about £18,000 arose. The taxpayer believed the amount of tax due was the result of a mistake. However, instead of amending her return under section 9ZA Taxes Management Act 1970 (TMA), she made a repayment claim on 13 October 2011 under Schedule 1AB TMA. In a letter dated 9 November 2011, HMRC rejected her claim as out of time. The taxpayer appealed HMRC's decision to the First-tier Tribunal (FTT).

HMRC applied to the FTT to have the appeal struck out pursuant to Rule 8 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, on the basis that the claim had been made out of time and was therefore not within the FTT's jurisdiction.

The FTT agreed with HMRC. Under the provisions of Schedule1AB TMA, the claim should have been made by 5 April 2011, but was not submitted until 13 October 2011. Accordingly, the FTT was of the view that in the absence of a statutory provision to extend or appeal against the time limit, the claim did not fall within its jurisdiction.

The taxpayer appealed to the UT.

The UT's decision

The taxpayer argued that the FTT had jurisdiction in respect of her appeal if she was able to show, by application of section 118(2) TMA, that she had a reasonable excuse for not having made the claim within the four-year time limit and that she had made the claim without unreasonable delay after the excuse had ceased.

Before the UT, the issues were, first, whether, in the circumstances of a claim under Schedule 1AB TMA, which had been made out of time, an appeal right could arise at all, and if it could, whether such a right had arisen in the present case. The parties accepted that for the FTT to have jurisdiction on an appeal under Schedule 1A the following matters were required in the following sequence:

1. a claim within the meaning of Schedule 1A;

2. an enquiry by HMRC into that claim;

3. a closure notice in respect of that enquiry; and

4. an appeal in time against the closure notice.

The second issue was whether section 118(2) TMA could have effect in relation to such a claim so as to permit a claimant who had a reasonable excuse and who otherwise satisfied the conditions of section 118(2) to be treated as not having failed to make the claim on time, with the result that the claim was to be regarded as having been made within the statutory time limit.

The UT said that the taxpayer's letter to HMRC of 13 October 2011 could not constitute a claim in time and could not therefore constitute one under Schedule 1AB, unless section 118(2) applied with the effect that it was treated as having been made in time.

In the view of the UT, nothing on the face of section 118(2) indicated that the words “required to be done” should be limited to mandatory acts and must exclude voluntary ones. However, for an act to be valid there was a requirement that it be done by a certain time, or in a particular way. The UT concluded that section 118(2) could therefore apply to a claim made under Schedule 1AB.

The UT concluded that, if the taxpayer had a reasonable excuse for not filing her claim within the time limit and made the claim without unreasonable delay after the excuse had ceased, section 118(2) would deem her claim to have been filed within the relevant time limit so that the appeal could fall within Schedule 1A, and the FTT had jurisdiction to decide this issue.

Interestingly, referring to Portland Gas Storage v CRC [2014] STC 2589 (see our previous blog) the UT noted that the opening and closing of an enquiry does not require any formalities. The legislation does not specify a minimum length of time between the opening and the closing of an enquiry. As a result, a single letter may constitute both the opening and the closing of an enquiry. This was the case with the letter sent by HMRC to the taxpayer informing her that her claim had been reviewed and rejected.

The UT allowed the taxpayer's appeal and remitted the case to the FTT.


This decision confirms that the opening and closing of an enquiry does not require any specific formality. What is important is that the substance of what is communicated by HMRC to the taxpayer. One letter from HMRC can both open and close an enquiry. Depending on the circumstances, this may, or may not, be to the advantage of the taxpayer.

For full judgment please click here.

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