Shinelock: Inadvertent Time Limit Extension

• Published date: 08 October 2021
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Trials & Appeals & Compensation, Tax Authorities
• Law Firm: Berg Kaprow Lewis
• Author: Mr Anthony Newgrosh

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...