What is a mistake?: claims for overpayment relief in L-L-O Contracting Ltd and others v HMRC [2025] UKUT 127 (TCC)

It is important to understand how and when overpaid tax can be reclaimed. The rules and procedures for doing so can be varied. This case concerned the application of overpayment relief provisions. Specifically, whether ignorance of multiple dwellings relief (“MDR”), resulting in a failure to claim MDR within the standard timeframe and by the usual mechanism, prevented MDR being awarded by way of an overpayment relief claim. Although this case concerns stamp duty land tax (“SDLT”) it should be of wider interest to those claiming overpaid tax due arising from a mistake.

Facts & Background

The Appellants (“LLO”) purchased residential properties and failed to claim MDR in their original land transaction returns as they had not known of its availability. LLO later sought to claim overpayment relief in respect of SDLT under paragraph 34, Schedule 10, Finance Act 2003 after the normal time limit for amending the returns had expired. HMRC rejected the claims. HMRC relied on Case A within paragraph 34A, Schedule 10, Finance Act 2003, which provided relevantly that HMRC were not liable to give effect to a claim if the overpayment resulted from a mistake in making or giving, or failing to make or give, a claim or election.

The First-tier Tribunal (“FTT”) had directed that certain issues were heard as preliminary issues in this case. It was common ground between the parties before the FTT that an overpayment relief claim could be made validly pursuant to paragraph 34, Schedule 10 in respect of MDR. Additionally, the FTT found that there was an overpayment of tax where a valid claim to MDR was not made in a return (or amendment to a return). HMRC did not challenge that finding. The FTT found that Case A excluded overpayment relief in this case because there had been a mistake in failing to make an MDR claim in the return (or amendment to a return). LLO’s appeal was struck out with no prospect of success. LLO appealed to the Upper Tribunal (“UT”).

Decision

On appeal, the UT considered the meaning of “mistake” in Case A. The UT found that, in ordinary language, a mistake can happen due to ignorance and not simply a failure to make a claim where the taxpayer was aware of the availability of relief. The UT considered that if ignorance would be excluded from the meaning of a mistake in Case A, it would undermine the statutory requirement to claim MDR in the return as the taxpayer could claim overpayment relief following the expiry of the usual MDR deadlines. This would reward ignorance of the law by allowing a much longer time limit to claim relief. Additionally, the UT found that by considering the other types of cases in the exclusions in paragraph 34A Parliament did intend to include ignorance in using the word “mistake” in Case A.

The UT dismissed the appeal, finding that LLO’s claims for overpayment relief were excluded by Case A. The overpayments resulted from failures to make timely claims for MDR, regardless of whether LLO was aware of that relief or not at the time.

Comment

This case is a useful addition to the case law on the parameters of overpayment relief claims. It is an important clarification of how Case A is intended to operate in practice and the limits of obtaining relief. It is clear that there would be an unfair distinction between ignorance of a relief available in a return and failure to make a claim with knowledge if the taxpayer had been successful. This illustrates the importance of obtaining advice on the availability of reliefs and making appropriate claims under the correct procedure and within time.

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

This article was prepared with the assistance of Marek Lukasik, a trainee in CMS London.