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CGT: Time limits for withdrawal of holdover relief (TCGA 1992 section 165)

HMRC's response to the CIOT's query concerning the time limit for withdrawal of holdover claims

The CIOT has written to HMRC to clarify HMRC’s view of the time limit for withdrawal of a holdover claim under TCGA 1992 section 165. The email exchange is set out below and HMRC have agreed that their response may be published. HMRC ‘s response confirms their view that the time limit for withdrawal is the normal time limit for amendment of a return, or amendment of a claim made outside a return, rather than the longer 4 year period allowed to make the claim. HMRC have confirmed that where the claim was made in a return an amendment can be made no later than twelve months after the statutory filing date. Where the claim was made outside a return, then an amendment can be made no later than twelve months from the date on which the claim was made.

CIOT question:

[The query ] concerns the time limit for withdrawal of holdover claims. Some publications state that a holdover claim can only be amended or withdrawn within the enquiry window where the claim is made in the tax return, or within a year of making the claim if made outside the return.


However, others say the claim can be withdrawn within the 4 year period now allowed to make the claim under TMA 1970 section 43 (as the legislation does not specify the withdrawal period), and another says that HMRC's practice is to interpret a statutory time limit for a claim as providing that a claim can be revoked at any time during the period given by statute for the making of the claim.


The time limit for withdrawal of holdover claims does not seem to be mentioned anywhere in the relevant part of the CGT manual, nor in the SATR Helpsheet http://www.hmrc.gov.uk/helpsheets/hs295.pdf (which does not actually even mention the time limit for making the claim).


It is noted that then Paymaster General, Dawn Primarolo said, in the FB 2004 Standing Committee debates in respect of what is now TCGA 1992 section 226A(6) which contemplates revocation of a holdover claim under section 260 that ;


‘Dawn Primarolo: The hon. Gentleman asked about time limits for revocation, whether both parties need to be involved, and how the gift hold-over claim can be revoked. If a claim was made within a tax return and the window for amending that return has closed, the person who made the gift cannot undo the position and is stuck with the consequences of the decision to make that arrangement in the first place to seek to avoid the tax. Likewise, if a claim was outside a return and the window for amending it has passed because it is more than 12 months from the date that the claim was made, the person cannot undo the position and is again stuck with the consequences of that decision.’(Standing Committee A Tuesday 25 May 2004 Morning)


It would be very helpful to understand the basis for this statement and whether HMRC considers that it applies generally to the withdrawal of a holdover claim.


As it is clearly important that claimants understand just how long they have to withdraw a claim, clarification on this point should be included in all HMRC guidance on the topic, especially if it was previously HMRC's practice to allow claims to be withdrawn for the longer period.

HMRC’s response:

Thank you for your query of the 8th September concerning the time limit for withdrawal of hold-over claims, which has been passed to me to provide a response.

The general claims and amendment legislation in TMA 1970 applies to a claim under s165 TCGA 92. A claim under s165 TCGA 92 is not irrevocable and we accept that a claim can be withdrawn by amendment.

HMRC’s guidance on the time limits for making and amending claims is published in the Self Assessment Claims Manual at SACM3000 onwards.

The current claim time limit, as set out in TMA 1970 43(1), is that a claim must be made within four years from the end of the year of assessment to which it relates.

Where the claim was made in a return then an amendment can be made no later than twelve months after the statutory filing date, as per TMA 1970 9ZA.

Where the claim was made outside a return, then an amendment can be made no later than twelve months from the date on which the claim was made; TMA 1970 Sch1A(3)(1)(b) applies.

The statement you have quoted is consistent with this understanding of the relevant legislation and HMRC’s published guidance, and has been the position since the introduction of Self Assessment.

I might add that certain provisions, for example TMA 1970 43A and 43C, may extend, with limitations, the time limit for making or varying a claim. There is guidance on this point in the Self Assessment Claims Manual at SACM9000 onwards.

 

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