Distributed to Non-charitable registered social landlords (excluding co-ownership societies) and their auditors.

Summary Changes timetables and moderates penalties for late claims.

Modifies circular F3 - 47/96.

1 Planned reduction of tax relief grants

1.1 The process of planned reductions which began on 1 April 1997 is drawing to a close. From 1 April 1999, the Government normally expects RSLs to take steps to manage without tax relief grants. The tax timetable means that the last group of regular claims will be for twelve month periods ending on 31 December 1999. Those RSLs would claim for the first three months of that period and the tax would have been due to the Inland Revenue by 2 October 2000.

2 Timetables, late claims and refunds

2.1 In view of the planned reduction, we have reviewed the timetables, and intend to introduce changes with immediate effect. They involve removing timetables that are no longer relevant and moderating the penalties for late claims. The specific changes are as follows:

(b) When no final assessment has arrived before the due date for payment of tax, we encourage but do not require a claim on account. This modifies para 3.2 of circular F3 - 47/96.

(c) Timetable for final claims.

For accounting periods ended after 30 September 1993 and before 1 July 1999.

An RSL's final claim for grant must arrive in our regional office within three months of the date of issue of a final assessment or an amended assessment accompanying a final tax demand.

For accounting periods ended on or after 1 July 1999

For these periods, an RSL may claim relief up to 31 March 1999 at the rates already published in circular F3 - 47/96. The Inland Revenue has introduced a self assessment system which does not always involve Inland Revenue issuing a final assessment or similar notification. An RSL's self assessment return can often be the last documented event. For these periods, then, an RSL's final claim for grant must arrive in our regional office within three months of the date of its self assessment return or of the date of this circular (31 December 2000), whichever is the later.

If an RSL discovers that it needs to amend its self assessment, or learns that it is under enquiry by Inland Revenue, it should alert the regional office within three months of that discovery, estimating the amount, or likely range, of the further claim. Failure to alert the regional office will not in itself debar an RSL from subsequently claiming but it might delay payment while the Corporation seeks the necessary budget, and the Corporation would pay no interest while it sought the necessary funds. Then, upon the final determination of its tax liability, an RSL should ensure that a final claim arrives in our regional office within three months of the date of that final determination or of the date of this circular (31 December 2000), whichever is the later. A final determination could be by an amendment by the RSL or the Inland Revenue to the self assessment, an Inland Revenue Determination where no self assessment had been submitted, or the outcome of a determination by a Court or independent tribunal.

Regional offices will consider explanations for late claims and be guided by the considerations in the appendix. When the Corporation imposes a penalty, it will be proportionate to the length of delay, a reduction in payment of 1.5% of the claim for each week or ppart week it was late. This replaces para 3.4 of circular F3 - 47/96. The Corporation will also review, against these new criteria, the few late claims which it had previously rejected outright under para 3.4 of F3 - 47/96. RSLs whose claims were rejected outright should contact the regional office.

(d) Supporting documents under self assessment are the self assessment return itself and any subsequent amended assessments or determinations which finalise the claim.

2.2 The following was introduced with circular R2 - 40/98. An RSL’s auditors need no longer sign a claim for tax relief grant. The auditor must instead consider it before signing the consolidated report and auditors’ opinion introduced by that circular.

2.3 If an RSL receives a tax refund, the Corporation expects it to review how much of the tax had been relieved by tax relief grant and to return that amount promptly to the Corporation. An RSL may not deduct from the grant repayment its administrative expenses incurred in obtaining a refund. However, an RSL may retain any interest added to a refund by the Inland Revenue.

3. Enquiries

3.1 Please address any questions about claims and timetables to the Financial Regulation team at the lead Corporation region.

Appendix to circular F3 - 22/00 - consideration of late claims for tax relief grant

Para 2.1(c) announces a penalty of 1.5% of the claim per week, or part week, that a claim arrives late in the regional office. The following explanations will not normally escape penalty:

(i) delay within an RSL, such as in obtaining signatures from committee members;

(ii) staff shortages in the RSL;

(iii) delay by agents of an RSL, such as auditors;

(iv) communications breakdown between RSL and agent;

(v) incorrect advice given by agents to RSL;

(vi) timetable spanning Christmas and other holiday periods;

(vii) the nature and importance of the RSL’s housing programmes;

However, “not normally” includes the possibility of reducing the penalty when an RSL is very small, suffers particularly from one or other of these factors because of its small size, and where it had little control over or opportunity to anticipate those factors.

The following explanations might mitigate the penalty, depending on examination of the circumstances by our regional office:

(viii) Incorrect or misleading information given by Corporation officers;

(ix) Claim posted but not received in the Corporation;

(x) Claims apparently received but mislaid by the Corporation;

(xi) Errors of fact when the claim turns out not to have been late after all;

(xii) Something which the Corporation has not anticipated here.

If a penalty, properly applied as above, would lead to severe financial difficulty for an RSL, our regional office has discretion to reduce the penalty until it prevents severe financial difficulty.