Capital allowances – errors and mistakes
HMRC have clarifed their policy in respect of the use of ‘error or mistake’ claims related to capital allowances.
Their new business brief makes clear HMRC’s view that taxpayers cannot use the ‘error or mistake’ provisions to substitute a claim for plant & machinery allowances for an earlier claim to industrial or agricultural buildings allowances in respect of expenditure incurred in a closed year.
There has been a lot of interest in the possibility of revising such claims in the light of the Budget 2007 announcment that industrial and agricultural buildings allowances (IBAs & ABAs) would be gradually withdrawn.
The Brief explains HMRC’s view that it is not possible to use the ‘error or mistake’ provisions in this way as:
- the error or mistake relief provisions specifically exclude relief for individuals and companies for a mistake in a claim made in a return
- no relief is due for a mistake in a claim made in a partnership return where the partnership has failed to amend its capital allowances claim within the period allowed
It remains possible for taxpayers to amend a return for qualifying expenditure incurred in a year for which the return was still open.