Tax Collection and Management (Wales) Act 2016 Claiming a refund: technical guidance

There are 3 circumstances under which a claim for a tax refund may be made:

• If you believe that you have been assessed for tax more than once for the same transaction (under section 62 TCMA)
• If you believe that you have paid an amount of tax that was not chargeable, or if a WRA assessment or determination has been made that you are chargeable to an amount of tax and you disagree (section 63 TCMA)
• Where you have paid an amount of tax according to a set of rates and bands, but those rates and bands are subsequently rejected by the National Assembly for Wales (section 63A TCMA)

We have developed specific online forms for different refund claims.

Where you have paid higher rates on your residential LTT transaction but have subsequently sold your previous main residence and wish to make a claim for the higher rates portion of the tax in accordance with the rules, this will be treated as an amendment under section 41 TCMA if it is made within 12 months of the date of the return. Outside of the 12 months, this will be treated as a claim under section 63 TCMA. We have a specific form for higher rates refunds, which can be found by following the link above. 

As outlined in TCMA/2010, we have specific online forms for different types of refund claims which should be used wherever possible.

When making a repayment claim, the claimant must:

• make the claim within 4 years beginning with the day after the filing date for the tax return to which the payment by way of devolved tax, or the assessment or determination, relates
• provide a declaration that all the particulars given in the claim are correctly stated to the best of their information and belief, and
• keep and preserve certain records which may be needed to make a correct and complete claim. The claimant may be liable to a penalty if they fail to keep and preserve these records as required

The online claim form should include the following information:

• confirmation of which of the three circumstances outlined in TCMA/2010
• a statement of the amount of devolved tax which will need to be discharged or repaid to give effect to the claim
• the grounds on which the claimant believes the double assessment or overpayment of tax has occurred, including details of any previous charge, and 
• supporting statements, documents and any other information which the WRA might reasonably require to determine whether and, if so, the extent to which the claim is correct

The WRA will only accept a claim if the relevant information and documentary evidence is provided by or on behalf of the claimant.

A claim should not be made by including it in a tax return.

Requests for refunds outside of the time limits to amend the return will generally be treated by WRA as a potential claim under section 62, 63 or 63A TCMA. 

Giving effect to a claim

As soon as practicable after a claim is made, amended or corrected, the WRA will:

• issue a notice of its decision to the claimant
• repay or discharge the amount (if it decides to give effect to the claim), and
• if the claimant had already paid the amount which is the subject of the claim, repay the amount with interest

Special rules for partnerships

If the amount of tax in question was originally paid by a person acting in the capacity of a responsible partner or representative partner, a claim for repayment of that amount can only be made by a responsible partner who is nominated to do so by all of the responsible partners who would have been liable to pay the amount had it been due.

If the WRA made an assessment or determination in relation to a person acting in the capacity of a responsible partner or representative partner, any claim for an amount of tax to be discharged can only be made by a responsible partner who is nominated to do so by all of the responsible partners who would have been liable to pay the amount had the assessment or determination been correctly made.

Assessment of claimant in connection with a claim

Where a claim for relief for overpaid tax is made, and the grounds for that claim are also grounds for the WRA to make an assessment on the claimant in respect of the tax, then the WRA can disregard certain restrictions on its ability to make an assessment. These include disregarding the expiry of a time limit. In such circumstances, the WRA assessment is not out of time if it is made before the final determination of the claim.

A claim is not finally determined until the amount to which it relates is final (for example, following the result of a review or appeal).

Contract settlements

In some instances, the person paying an amount to the WRA under a contract settlement and the taxpayer to whom the tax liability relates are different.

In such cases, any claim for repayment of an amount paid under a contract settlement must be made by the person who is liable to pay under the contract settlement (the claimant), whether or not this was the person whose tax liability was covered by the agreement (the taxpayer). This might be the case where, for example, a nominated partner in a property partnership enters into a contract settlement with the WRA on behalf of the partnership or another partner in the partnership. The nominated partner in this case would have to make the claim for repayment.

Where such a claim is made which then gives the WRA grounds to make an assessment against the taxpayer (see above), any amount to be repaid to the claimant can be set-off against any amount payable by the taxpayer as a result of the assessment. The obligations of both the WRA and the taxpayer are discharged to the extent (but only to the extent) that one liability is offset by the other.

An amendment can be made by notifying the WRA, stating the grounds on which the original claim is being amended.

An amendment may not be made:

• more than 12 months after the day on which the original claim was made, or
• if the WRA gives notice of enquiry (see below), during the period beginning with the day on which that notice is given and ending with the day on which the enquiry is completed

The WRA may amend a claim to correct an obvious error or omission. It will notify the claimant of such a correction. An ‘error’ includes an arithmetical mistake or an error of principle (such as entering a forename and surname the wrong way around).

Once a correction has been made, the WRA will give effect to the claim by discharging or repaying the amount (whichever applies) as soon as is practicable.

The WRA cannot make such a correction:

• more than 9 months after the claim was made (that is, the date claim was received), or
• if it gives a notice of enquiry during the period beginning with the day on which such a notice is given and ending with the day on which the enquiry is completed

The claimant may reject the correction but only by notifying the WRA that they wish to reject it within 3 months, beginning with the date on which the notice of correction was issued to the claimant.

The WRA may enquire into a claim (or amendment of a claim) by notifying the claimant of its intention to do so (a ‘notice of enquiry’) no later than 12 months after the day on which the claim is made (that is, the day the WRA received the claim).

The WRA cannot give a notice of enquiry in relation to a claim (or amendment of a claim) which has already been the subject of a previous notice of enquiry.

Completion of an enquiry

An enquiry is completed when the WRA informs and notifies the claimant (by means of a ‘closure notice’) that the enquiry is complete and states the conclusions they have reached in the enquiry. The WRA may also provisionally give effect to a claim or amendment before the closure notice is issued.

The closure notice must either state that:

• in the WRA’s opinion, no amendments of the claim are needed, or 
• if the WRA believes that the claim is insufficient or excessive, it may amend the claim to make good or eliminate the deficiency or excess

If the enquiry is in relation to an amendment of a claim by the claimant, the WRA can only amend it so far as the deficiency or excess is attributable to the claimant’s amendment.

Where the WRA amends a claim following an enquiry, it must give effect to it by making any necessary adjustments (whether by way of an assessment or by repaying or discharging an amount of tax) within 30 days of the date the closure notice was issued.

The claimant can request a review by the WRA or appeal against a conclusion stated in, or an amendment made by, a closure notice. The claimaint must request a review by giving a notice of request to the WRA within 30 days of the closure notice being issued. The claimant may also appeal to the tribunal against a decision in a WRA closure notice or amendment. This must be done within 30 days from the date the closure notice was issued, or within 30 days from the date the WRA notifies the claimant of the outcome of its review (if requested).

In such a case, the tribunal may vary that amendment whether or not the variation is to the claimant’s advantage. The WRA must give effect to the variation in the same manner as would have applied to the amendment which was appealed against.

The claimant may also apply to the tribunal for a direction to the WRA to complete its enquiry within a specified period, for example if they feel the WRA is taking too long to carry out the enquiry. The tribunal must give such a direction unless it is satisfied that the WRA has reasonable grounds for not issuing a closure notice within the specified period.

Anyone making a claim for an amount of tax to be repaid or discharged, must keep and preserve records in relation to that claim until the latest of the following:

• 12 months from the day on which the claim was made, or
• if there has been an enquiry into the claim or into an amendment to the claim, the date on which the enquiry is completed, or
• where the claim is amended but there is no enquiry into the amendment, the date on which the WRA is no longer able to open an enquiry into the amendment.

The WRA can reject a claim for an amount to be repaid or discharged if repaying or discharging that amount would unjustifiably enrich the taxpayer.

Unjustified enrichment may occur where the taxpayer has not ultimately borne the cost of the tax that would otherwise be repaid or discharged and has already collected it from someone else. For example, if an amount of LDT is repaid to a landfill site operator, the operator will already have collected the tax from customers paying to deposit waste at the landfill site.

Where a claim is made for an amount to be repaid or discharged and someone else other than the taxpayer has borne the cost of that amount, in determining whether or to what extent the taxpayer would be unjustifiably enriched, the WRA must disregard any loss or damage (except to the extent of a ‘quantified amount’) that has been incurred, or might be incurred, by the taxpayer as a result of mistaken assumptions made by the taxpayer about the operation of any ‘tax-related provisions’.

A ‘quantified amount’ means the amount (if any) which the taxpayer shows to be appropriate compensation for the loss or damage resulting from the mistaken assumption.

‘Tax related provisions’ in this context include:

• the provisions of any enactment, subordinate legislation or EU legislation (whether or not still in force) which relates to the tax (or any other connected matter) that is contained in the claim, or
• any notice the WRA has published under or for the purposes of any such enactment or subordinate legislation

In order for the WRA to take any reimbursement arrangements into account in determining whether or not a claim would unjustifiably enrich the taxpayer, certain conditions must be included and undertakings given.

The conditions which must be included are that:

• the taxpayer must complete the reimbursement (including any interest paid in relation the amount being reimbursed) to the relevant person(s) within 90 days of the WRA making the repayment
• the claimant cannot deduct any fee or charge (howsoever expressed or effected) from the amount being reimbursed, including any interest paid in relation to that amount;
• reimbursement must be provided in cash or by cheque, or electronically with the agreement of the customer
• if any part of the amount to be reimbursed (including any interest paid in relation to that amount) has not been reimbursed to the customer by the 90 day time limit, without prior demand, the taxpayer must pay this part of the amount to the WRA no later than 30 days after the 90 day time limit has expired. Failure to do this may result in a penalty of 100% of the repayment required to be made to WRA, and
• the taxpayer must keep specified records relating to the claim and produce them to the WRA in accordance with any information notice given to them (see below)

The undertakings the taxpayer must give are that:

• they have the names and addresses of the people who have either already been reimbursed or intend to reimbursed
• they will fully reimburse people (by cash, cheque or electronically by agreement), including any interest paid in relation the amount being reimbursed and without deducting any fee or charge (however expressed or effected), no later than 90 days after they received repayment from the WRA
• if any part of the amount being reimbursed (including any interest paid in relation to that amount) has not been reimbursed by the 90 day time limit, without prior demand, the taxpayer will pay this part of the amount to the WRA within 30 days of the end of the 90-day period, and
• they will keep the records as described further below, and will comply with any notice issued requiring them to provide those records

These undertakings must:

• be given to the WRA before or at the same time as the claim is made, and
• be signed and dated and in writing

The taxpayer must keep the following records relating to reimbursement arrangements:

• the names and addresses of the people who have been reimbursed or intend to be reimbursed
• the total amount reimbursed to each such person, including in all cases receipts from those reimbursed acknowledging how much has been reimbursed and which give the date of reimbursement
• the amount of interest included in each total amount reimbursed to each customer, and
• the date that each reimbursement is made

These records must be kept for the latest of:

• a period of 12 months from the date of the claim relating to the reimbursement arrangements
• where there is an enquiry into the claim, or into an amendment to the claim, the day on which the enquiry is completed
• where the claim is amended and there is no enquiry into the amendment, the day on which the WRA ceases to have the power to enquire into the amendment

Failure to keep the above records as required may result in a penalty.

If the WRA wishes to see these records, it will notify the taxpayer in writing, stating the place, time and date at or on which the records must be produced. The WRA can notify the taxpayer before or after (or both before and after) it has repaid the amount in the claim. If the taxpayer fails to comply with such a notice they may be liable to a penalty.

The WRA can reject a claim for an amount to be repaid or discharged if repaying or discharging that amount would unjustly enrich the taxpayer.

Where this is the case, the taxpayer can give a notice of review or appeal against the WRA’s decision to reject the claim.

The WRA may also reject a claim if it applies to any of the following cases:

1. The amount of tax paid, or liable to be paid, is excessive because of either a mistake in the claim or the claim is made, or has failed to be made, by mistake.
2. The claimant may seek relief (or will be able to seek relief) by taking other steps, such as amending their tax return or making a tax return following a WRA determination.
3. The claimant:
   • could have sought relief by taking other steps (see above) but the time period for doing so has now expired, and
   • the claimant knew (or should have reasonably known before the end of that period) that such a relief was available to them.
4. The grounds for the claim:
   • have already been put to a court or tribunal in the course of an appeal relating to the amount that has been paid or is liable to be paid, or
   • have already been put to the WRA in the course of a review or appeal relating to the amount that has been paid or is liable to be paid, and the grounds are treated as having been determined by the tribunal by virtue of a settlement agreement being entered into.
5. The claimant knew (or should have reasonably known) about the grounds for the claim before the latest of any of the following:
   • the date on which a relevant appeal (in the course of which the ground could have been put forward) was determined by a court or tribunal, or is treated as having been so determined
   • the date on which the claimant withdrew a relevant appeal to a court or tribunal, or
   • the end of the period in which the claimant was entitled to make a relevant appeal to a court or tribunal. ‘Relevant appeal’ means an appeal by the claimant relating to the amount paid or liable to be paid which is the subject of the claim.
6. The amount in question was paid or is liable to be paid either:
   • in consequence of proceedings enforcing the payment of that amount brought by the WRA against the claimant, or
   • in accordance with an agreement between the WRA and the claimant settling such proceedings.
7. The amount paid, or liable to be paid, is excessive because of a mistake in calculating the claimant’s liability to devolved tax, and that liability was calculated in accordance with the practice generally prevailing at the time. This does not apply where the amount paid, or liable to be paid, is tax which has been charged contrary to EU law. Tax is charged contrary to EU law if, in the circumstances in question, the tax charged is contrary to the provisions relating to the free movement of goods, persons, services and capital in Titles II and IV of Part 3 of the Treaty on the Functioning of the European Union, or the provisions of any subsequent treaty replacing these provisions.

In addition, the WRA may refuse a claim for relief from a landfill site operator where the relief claimed relates to an amount of tax that has not been paid.