Good news for taxpayers in relation to claims for overpaid tax: Christian Peter Candy v HMRC [2025] UKFTT 00416 (TC)

Introduction

An interesting procedural decision has been released in relation to overpayment relief claims. Although the appeal concerns a claim for repayment of stamp duty land tax (“SDLT”), it should be of wider interest. The decision confirms that overpayment relief claims are intended to provide a final statutory remedy where other remedies have been exhausted. This will be positive news for taxpayers looking to make claims for overpaid tax.

Background

Mr Candy had an initial liability to SDLT (in the sum of £1,920,000) triggered by substantial performance of a contracted-out lease. This SDLT liability was declared in a return and paid. The contract was subsequently extinguished due to novation and not carried into effect. This happened after the expiry of the normal 12 month time limit for amending the return.

Mr Candy made separate claims for SDLT relief in the alternative. A claim for relief under section 44(9) Finance Act 2003 (the “s44 Claim”) and an overpayment relief claim under paragraph 34, schedule 10, Finance Act 2003 (“para 34”) (the “Overpayment Relief Claim”). Different time limits apply to both claims. A s44 Claim should be made by amending a land transaction return within 12 months of the filing date. An Overpayment Relief Claim should be made not more than 4 years after the date of the transaction and should not be made within a land transaction return.

The s44 Claim was made beyond 12 months of the filing date of the return. The Overpayment Relief Claim was made within time due to the longer limitation period. It was common ground between the parties that, had the s44 Claim been made within time, relief for SDLT would have been available.

In separate proceedings, which progressed first, the s44 Claim was found to be invalid for limitation reasons (see Christian Peter Candy v HMRC [2022] EWCA Civ 144) (“Candy CA”)). As such, a stay was lifted on the alternative Overpayment Relief Claim, which forms the subject of the present appeal.

Issues

The issue for determination by the First-tier Tribunal (“FTT”) was whether overpayment relief was available under para 34 in a situation where SDLT would have been repayable under s44(9), but the s44 Claim was out of time.

HMRC contended that the Overpayment Relief Claim must fail because it is prevented from applying by the existence of an alternative remedy in s44(9). In essence because s44 provides an exclusive statutory remedy. Further, HMRC contended that if a claim under para 34 were possible, that would undermine the time limit to which s44(9) is subject.

The Appellant submitted that para 34 is a stand-alone provision which provides a “back stop remedy” where relief cannot be claimed on any other statutory basis (including due to the expiry of a time limit).

Decision – wide application for overpayment

Overpayment relief claims are subject to restrictions in para 34A. For example, overpayment relief is limited where the claimant can seek relief by taking other steps under the relevant Part of the Act. HMRC did not contend that any of the para 34A restrictions applied here.

The FTT agreed that para 34 had a “potentially wide application” once its threshold provisions were met and its procedural requirements satisfied. Relevantly, para 34 relief would be possible where a claimant is out of time to claim relief for SDLT under another relieving provision.

It held that Mr Candy was entitled to bring an Overpayment Relief Claim under para 34. The purpose of para 34 was to provide a final statutory remedy when no other remedy exists. This would be a back stop where all other statutory relief provisions had been exhausted.

Comment

This case will be of interest for procedural reasons to those claiming repayments of SDLT, but equally in relation to overpayment relief for other taxes.

As part of its consideration of the provisions, the FTT looked to the explanatory notes to the Finance (No 2) Bill 2010 that introduced the relevant form of para 34.  

Those explanatory notes indicate that the provision is intended to cover an overpayment or overassessment situation where there is no other means of reclaiming the overpayment. Additionally, it was intended to replace alternative legal actions for repayment or restitution in respect of an overpayment, ensuring that disputes are dealt with by the tribunal not the courts.

This point relates to the history of tax claims for overpayment. Historically it was common practice for claims to be brought in restitution in the High Court across various taxes (see for example the FII Group Litigation). Often claimants brought alternative claims in statute. However, restitution claims were often preferred due to the potential for longer limitation periods and a more beneficial interest award (although this has been challenged in cases in recent years). The overpayment relief provisions were intended to provide an exclusive statutory regime for overpayments, for which the tax tribunal was the relevant forum.

In light of this background, it is somewhat difficult to understand the fairness of HMRC’s position here. If HMRC were correct this would narrow the ability for taxpayers to obtain recourse for overpaid or over-assessed taxes across income tax, CGT, SDLT and corporation tax. The 4 year period for bringing overpayment relief claims reflects the standard time limit for HMRC to raise discovery assessments (although longer limitation periods apply in some situations). As such, to restrict relief to a much shorter period would have provided an uneven playing field in favour of HMRC. It remains to be seen if HMRC will seek to appeal the decision.

Taxpayers should consider their procedural options where they have overpaid tax for previous years. There may be options to obtain relief, whether by making overpayment relief claims or otherwise.

For further information please email the authors or your usual CMS contact.