Overpayment relief was introduced from 1 April 2010 and replaced error or mistake relief for Income Tax, Capital Gains Tax (CGT) and Corporation Tax. Overpayment relief allows taxpayers to recover overpaid Income Tax, CGT, Class 4 NIC, Corporation Tax, overpaid bank payroll tax or to reduce an excessive assessment.
According to the HMRC, the rules for overpayment relief are intended to:
- give a single route for persons to recover overpayments
- bring the claims process into line with self-assessment claims and
- align time limits with those for other claims.
Claims for overpayment relief must be made within 4 years of the end of the tax year or accounting period to which the claim relates. A claim for overpayment relief can only be made under certain circumstances.
For example, a taxpayer can only claim overpayment relief if they have not had a reasonable chance to correct their tax liability any other way, by making or amending a self-assessment return or appealing against an HMRC assessment or amendment of their return.
A claim for overpayment relief should be made in writing clearly stating the reason for making a claim, the period to which the claim relates and the reasons why the taxpayer considers that the overpayment or excessive assessment has occurred.