In Dundas Heritable v HMRC [2017] TC6476, the First Tier Tribunal (FTT) found on technical analysis, that Paragraph 82 Schedule 18 FA 1998 gives an unexpected result: the taxpayer is given the chance to make a late claim for capital allowances once HMRC has opened an enquiry into the relevant return.

  • The company submitted its Corporation Tax returns, including Capital allowance claims for both years ending 31 March 2012 and 2013, late.
  • HMRC opened enquiries into each, in time, and disallowed the capital allowance claims on the grounds that they were made out of time.
  • HMRC issued closure notices and the company appealed.

The company argued that paragraph 82(1)(b) Schedule 18 Finance Act 1998 applies to extend the time limit for making capital allowance claims.

HMRC argued that as the claims were not made within the time limit contained in paragraph 82(1)(a) a late claim was not possible.

The case involved the interpretation of paragraph 82 Schedule 18 Finance Act 1998.

The FTT found that as an enquiry had been opened the claims were possible and made in time by virtue of paragraph 82(1)(b) notwithstanding the fact that claims were not made within the time limit contained in paragraph 82(1)(a).


HMRC subsequently appealed to the Upper Tribunal, which upheld the FTT decision. See HMRC v Dundas Heritable [2019] UKUT0208 

Paragraph 82 Schedule 18 says:

82.—(1) A claim for capital allowances may be made, amended or withdrawn at any time up to whichever is the last of the following dates—

 (a) the first anniversary of the filing date for the company tax return of the claimant company for the accounting period for which the claim is made;

(b) if notice of enquiry is given into that return, 30 days after the enquiry is completed;

(c) if after such an enquiry the Inland Revenue amend the return under paragraph 34(2), 30 days after notice of the amendment is issued;

(d) if an appeal is brought against such an amendment, 30 days after the date on which the appeal is finally determined.

(2) A claim for capital allowances may be made, amended or withdrawn at a later time if the Inland Revenue allow it.

(3) The time limits otherwise applicable to amendment of a company tax return do not apply to an amendment to the extent that it makes, amends or withdraws a claim for capital allowances within the time allowed by or under this paragraph.

(4) The references in sub-paragraph (1) to an enquiry into a company tax return do not include an enquiry restricted to a previous amendment making, amending or withdrawing a claim for capital allowances.

An enquiry is so restricted if—

(a) the scope of the enquiry is limited as mentioned in paragraph 25(2), and

(b) the amendment giving rise to the enquiry consisted of the making, amending or withdrawing of a claim for capital allowances.”

The limitation in paragraph 25(2) relates to where a notice of enquiry is given as a result of an amendment by the company of its return and it limits the enquiry to that amendment in certain circumstances. 

Useful guides on this topic

Plant & machinery: Allowances
What capital allowances are available on plant and machinery? How do you calculate them? What are qualifying activities?

External link

Dundas Heritable v HMRC [2017] TC6476

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