On appeal from: [2016] EWCA Civ 40

This appeal considered whether HMRC was entitled to enquire into the appellants’ claims for loss relief otherwise than by opening an enquiry under the Taxes Management Act 1970, Sch 1A, which is subject to a time limit that had elapsed prior to the date of the enquiry.

The Supreme Court unanimously dismissed the appeal holding that, under the Taxes Management Act 1970, s 42, where HMRC has given notice to a person requiring him to make and deliver a tax return, a claim for relief must be included in that tax return, and that in the case of a partnership, such a claim must be made on a partnership return. However, because in the instant case the appellants sought relief for loss incurred in a later year (“Year 2”) by carrying it back to an earlier year (“Year 1”), s 42 was disapplied by Sch 1B, and so a claim had to be made under Sch 1A. Enquiries into claims under Sch 1A are subject to time limits and the appellants argued that HMRC could not enquire into their claims because these limits had expired. However the Court held that this was not the case due to other provisions in the Taxes Management Act 1970 which stated what a taxpayer must include in his return. The Court held that HMRC was empowered (under the Taxes Management Act, s 9A) to enquire into the appellants’ carry back claims contained in their Year 2 tax returns and that HMRC were not required to institute an enquiry under Schedule 1A in order to challenge the appellants’ claims.

For judgment, please download: [2017] UKSC 74
For Court’s Press Summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (22 Jun 2017 morning session) (22 Jun 2017 afternoon session)