Annex 1: Minor changes in the law made by the Act: Change 31: Gifts of trading stock: drop the need for a claim: section 108
This change removes the requirement that a taxpayer should make a claim for relief on a gift to an educational establishment.
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.
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 the change from making a claim to allowing the relief will have only the following consequences, which both 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, the Inland Revenue is no longer able to refuse a claim because it is late by reference to an absolute time limit: returns time limits and sanctions will apply and they depend on the date the return was issued and submitted.
Second, error or mistake relief claims under section 33 of TMA will be possible if too much tax is paid as a result of omitting to include the relief in the tax return. Claims under section 33 of TMA must be made within five years of 31 January following the tax year 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.