In Mohammed Masbah Uddin v HMRC [2020] TC7918, the First Tier Tribunal (FTT) found that HMRC was operating double standards when it withheld out of time tax from a foreign student's claim for a tax refund. 

A Bangladeshi national performed some part-time work with Income Tax deducted between 2009 and 2014, while he studied in the UK.

Two issues were raised by the appeal:

  1. Whether HMRC were correct to refuse to repay the tax deducted from Mr Uddin’s earnings in 2012-13 on the basis that the claim was made outside the four-year time limit provided by the TMA.
  2. Whether HMRC were correct to reduce the tax repayment in relation to 2013-14 and 2014-15 to recover tax they said Mr Uddin had underpaid in 2012-13.

The FTT found that:

The FTT considered that if HMRC wished to extend their assessment time limits this should be done via a Discovery Assessment. In any case, Mr Uddin was an employee in 2012-13 and HMRC should have considered raising a PAYE Regulation 80 on his employer or 72 assessment. HMRC was out of time to do this.

The appeal was partly allowed and HMRC must repay Mr Uddin the balance of the tax deducted from his earnings in 2013-14 and 2014-15.

Comment

This is a familiar story: we have seen similar cases where HMRC has offset amounts from earlier years when they are clearly well out of time.

Useful guides on this topic

Time limits for making claims & adjustments
What is the time limit for making a claim for a tax refund? What is the time limit for HMRC to make an assessment?

Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery.

Regulation 80 and 72 determinations for PAYE
When HMRC can assess a company or its owners for failure to deduct PAYE and NICs.

Appeals
What type of decision can you appeal? What are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Mohammed Masbah Uddin v HMRC [2020] TC7918