Annex 1: Minor Changes in the Law Change 28: Trading income: gifts of trading stock: drop the need for a claim: section 105 and Schedule 1
This change removes the requirement that a company should make a claim for relief on a gift to an educational establishment.
It brings the income tax and corporation tax codes back into line.
Section 84(3) of ICTA provides that the relief does not apply unless “the donor makes a claim”. The general approach of this Act is not to require a claim for a trading deduction. In this case, the relief takes the form of removing the obligation to include a trade receipt. But the same principle applies here.
Section 42(7) of TMA sets out the rules for making claims. Schedule 1 to this Act removes the reference to section 84 of ICTA in paragraph (a) of that subsection and does not replace it.
The similar relief for gifts to charities in section 83A of ICTA does not require a claim. So this change makes the two reliefs consistent.
The provisions that govern claims are not the same as the provisions that govern returns. But in practice dropping the need for a claim has only the following two consequences, both of which relate to the time available for “claiming” the relief.
First, the absolute time limit for making a claim is replaced by a time limit that may vary according to the particular circumstances. That may be because the return is issued late or because the taxpayer makes a late return. Accordingly, HMRC are no longer able to refuse a claim because it is late by reference to an absolute time limit: returns time limits and sanctions apply and they depend on the date the return was issued and submitted.
Second, mistake relief claims under paragraph 51 of Schedule 18 to FA 1998 are possible if too much tax is paid as a result of omitting the relief from the tax return. Claims under paragraph 51 of Schedule 18 to FA 1998 must be made within six years of the end of the accounting period to which the return relates.
This change is in taxpayers’ favour in principle and may benefit some taxpayers in practice. But the numbers affected and the practical effects are likely to be small.