The recent First-tier Tribunal (‘FTT') case of Shinelock [2021] UKFTT 320 (TC) ranged over a large number of issues, some of which we may cover in later briefings. But what caught our eye in particular was a point of potentially wide application regarding the making of claims to relief.
All claims to tax relief are subject to a time limit. Sometimes it's specified in the claim: if not, a ‘default' time limit applies. In the case of some claims (but by no means all) HMRC are given the power to extend the time limit – commonly but perhaps confusingly often referred to as ‘admitting' a late claim. There is no right to appeal against HMRC's refusal to extend the time limit: it can be challenged only by way of application for judicial review.
The reason that terminology such as ‘admitting' a late claim is unhelpful is that, at least in theory, agreeing to extend the time limit for making a claim and agreeing the substantive validity of the claim are different. In principle it is open to HMRC to say: Yes, we will extend the time limit for you to make a claim to such-and-such a relief: but No, we do not agree that you satisfy the conditions for the relief. In practice, however, the two are in our experience always elided: Yes, we will grant you the relief even though your claim to it is out of time.
In Shinelock the claim in question (which happened to be a claim under CTA 2009 s459 to offset a non-trading loan relationship deficit – ‘NTLRD' – but nothing hangs on that) had to be made by 31 March 2017 or ‘within such further period as an officer of Revenue and Customs allows'.
The claim was made on 22 June 2018: it was plainly late. However, HMRC did not simply reject it on that basis. Instead, they explained that they did not agree that there was an NTLRD at all (as well as rejecting other arguments that had been put forward to dispute the assessment). It appears that HMRC identified the lateness of the claim only when preparing for the FTT hearing in 2021.
The question for the FTT was whether HMRC had, by their conduct, done what they were permitted but not required to do under s460(1)(b): namely, allowed the claim to be made outside the time limit (albeit that they had not agreed its substantive validity).
Somewhat surprisingly, the FTT held that HMRC had:
‘HMRC were maintaining a position that there was no NTLRD. There was no mention of the need to claim such a deficit to use it in the current year, the time limit or that no mention had been made by Shinelock of the use of such a deficit until after the expiry of the two year period set out in s460(1)(a). Significantly, there was no rejection of the claim on the express basis that it was made late.
I have concluded on the facts that HMRC have allowed the claim to be made to use a NTLRD (assuming that it existed) after the expiry of the two year period required by s460(1)(a) in circumstances where HMRC did not make a deliberate decision to this effect.'
This is only an FTT decision: it has no value as precedent, and it may be reversed on appeal. But it is nonetheless potentially helpful. On the basis of Shinelock it is not necessary for HMRC to say the words ‘we extend the time limit' for a claim: it may be possible to argue that they have inadvertently extended the time limit simply by addressing the substance of the claim.
It did not, by the way, help Shinelock in the end: the FTT agreed with HMRC that there was no NTLRD to be relieved.
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