Higher Rate Tax Relief for Pension - HMRC refusing to pay

CharliMcFarli

Hi all

Long time subscriber, first time poster and would appreciate any advice there is on this one...

I recently wrote to HMRC to claim higher rate tax relief back on historic pension contributions. Happily, they've paid up back to 2012/13 but are refusing to go back to 2011/12 and beyond, despite owing a significant amount (five figures...).

I appreciate back payments need a time limit, but HMRC advised on several occasions between 2000-2008 that I did not need to submit a self assessment tax return because I neither owed or was owed tax.

Naturally, I'm not taking no for an answer and have written back suggesting it's their error, not mine and I'd like them to revisit their position.

I'm wondering whether there is anybody else on the forum who has tackled this, what degree of success they've had, and whether there is anything else I can do to push HMRC.

Thanks in anticipation...

bigadaj

Don't understand why you haven't applied for this before, there is a normal time limit of six years so I can't see you getting anything further back than that.

kidmugsy

It may be that your best chance of success is to get your MP interested. Or even a retired MP, judging by one story I know.

CharliMcFarli

@bigadaj Because I've not long known it isn't automatically sorted!

zagfles

If you've had any bank interest etc then you should have paid extra tax.

Snakey

bigadaj wrote: »

Don't understand why you haven't applied for this before, there is a normal time limit of six years so I can't see you getting anything further back than that.

Sorry to be nit-picky, but for higher rate relief on pensions it's four years.

It's not too uncommon that people don't claim. The media in their year-end tax planning articles always point out that you only get basic rate relief automatically and that for higher rate relief you need to claim, but (due to these articles being generally written by non-experts) the time limit tends not to be spelled out. And I suppose there are plenty of people who don't take enough of an interest in their finances or their retirement planning to read articles like that in the first place. Or, indeed, the documentation that they were given when they started their pension plan.

I have a vague recollection of there being a legal case on this exact thing a while back (this year or last) - somebody wanting to claim out of time - I think the taxpayer lost. Can't immediately find it, thought I'd mention it in case the OP might want to do some digging.

OP, you say you had five figures less going in to your pension than you expected, and you didn't notice?! Don't get me wrong, it sucks to be you today and that's a lot of money whatever your income. It doesn't seem fair that there's a time limit at all, and it's frustrating that it isn't somehow calculated automatically for those with only one source of income and only one pension plan. But you need to get a better handle on your finances than this! What if, instead of that five-figure difference being unclaimed tax relief, your employer had been cheating you? Would you ever have spotted it?

Spidernick

Ultimately HMRC will say we are all responsible for reviewing our own tax liabilities - 'Self Assessment' does what it says on the tin! The time limit has passed for years up to 2011/12 and I'd be very surprised if you got anywhere with this.

Perhaps HMRC told you you didn't need to file tax returns as you were getting higher-rate tax relief through your tax code? You should go back and check these as perhaps not every year is affected.

Surely most pension schemes send a statement each year and will have a note saying any higher/additional rate tax relief has to be claimed, as limited to basic rate at source?

Finally, if you are in employment then you should see if your employer offers a pension scheme. They may well add to your personal contributions and, if the scheme is a salary sacrifice one, you'll get NI as well as tax relief.

jem16

CharliMcFarli wrote: »

I appreciate back payments need a time limit, but HMRC advised on several occasions between 2000-2008 that I did not need to submit a self assessment tax return because I neither owed or was owed tax.

Based on the information that was given to them, I expect they were correct.

Naturally, I'm not taking no for an answer and have written back suggesting it's their error, not mine and I'd like them to revisit their position.

How is it their error when you have never advised them?

There are so many different ways of paying into a pension scheme - ie from gross earnings, from net earnings or via salary sacrifice. Not all of them require you to claim higher rate tax relief as some already give you full relief at source. So how would HMRC know unless you tell them?