Further to our article titled ‘The Lazarus Impact – Making very Late Capital Allowances Claims’ where the First Tier Tax Tribunal allowed a pub company (the taxpayer) to file a very late capital allowances claim. HMRC appealed the First Tier Tax Tribunal’s decision at the Upper Tax Tribunal.

The taxpayer won again and HMRC lost the appeal.  The Upper Tax Tribunal sided with the taxpayers interpretation of the legislation and held the decision to allow the late filing of the capital allowances claim as a result of an HMRC enquiry is correct in accordance with Finance Act 1998 Schedule 18 paragraph 82.

This highlights a pitfall in the legislation and leaves HMRC in a ponderous circumstance. Raising an enquiry may validate a late filed capital allowances claim. If HMRC then raise an enquiry it may extend the tax filing deadline and validate the late filing of a capital allowances claim.

The Lazarus impact appears to remain unless HMRC seeks to introduce new legislation to remedy this defective law.

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