OTS: Claims and elections review consultation and scoping document

The Office of Tax Simplification (OTS) has published a call for evidence on claims and elections and asks for written responses to be sent to [email protected] by 8 May 2020.

Claims and elections are a long-standing feature of many UK taxes. In some cases, it is unclear why there is a need to make a specific or separate claim or election in order to benefit from a relief or exemption, and this can lead to some of those who are entitled to benefit missing out.

OTS published a scoping document that identifies opportunities for simplification, both in relation to the claims or elections presently needed for certain reliefs or exemptions, and the processes involved.

The work focuses on how the administration of claims and elections may be simplified and, where relevant, it will also consider related policy issues, including around the awareness and uptake of these reliefs, the possibility of removing or replacing minor reliefs or simpler and cost-effective ways of achieving the desired policy outcomes.

Claims and elections that may be considered are likely to include:

  • Claims for relief for certain expenses incurred by employees and not reimbursed, in particular flat rate allowances such as for cleaning uniforms or for tools
  • Capital allowances, including issues arising when these are subject to specific claims rather than handled within tax returns
  • Section 198 elections (for allocating property sale proceeds between buildings and fixtures), taking forward a recommendation in the OTS’s 2017 report on simplifying the corporation tax computation.

While the primary focus of the scoping review is not on charity related issues, there is a general request for feedback on other taxes. Charities are required to opt-in/make claims for number of tax reliefs, including claims for Gift Aid and issuing zero/reduced rate VAT certificates so simplification could really help. We understand that claiming business rates is outside of the scope of this review, but it is another administrative burden for charities as claims have to be made separately to each local authority.

Consultation Questions

The OTS welcomes responses to all or any of the questions set out below, as well as any general or
specific comments on the areas covered by this review. There is no requirement to respond to all the
questions; responses focusing on a particular area are equally welcome. The consultation questions are reproduced below.

  1. What are the types of claim or election that you deal with most frequently?
  2. Which claims and elections do you find the most time consuming to deal with?
  3. Please provide examples of any types of claim or election that you consider are particularly
    difficult or complex to administer. Please explain why you think this is.
  4. Please provide examples of any types of claim or election that you consider are particularly
    easy or simple to administer. Please explain why you think this is.
  5. Have you been discouraged from claiming a relief because the process involved was, or
    appeared to be, too difficult or time consuming? Please provide details.
  6. Are there any claims or elections for which you feel the information or the work required in
    making them is excessive or disproportionate?
  7. In your experience, what are the claims for relief that are most often administered by high
    volume repayment agents? What do you think motivates people to use such agents rather than dealing with the claim themselves? Do particular benefits or problems arise?
  8. Do you think there are any reliefs that currently need to be claimed or elections that can be
    made, where it would be feasible and simpler for them to operate automatically or by
    default (subject to the ability to opt out)? Please provide examples.
  9. Are there any key differences to the way claims or elections are administered across
    different taxes that you think could helpfully be aligned?
  10. Do any issues or difficulties arise in cases where a claim or election can either be made or
    amended within a tax return or, either sometimes or only, separately from a return?
  11. Do any issues or difficulties arise in relation to the time limits within which a claim or
    election must be made or amended?
  12. Are there any features that contribute to making time limits in which you must make a claim
    or election easier to miss? For example, is this the case in relation to time limits that operate
    by reference to an event rather than the end of a tax year or accounting period?
  13. To what extent do you think that HMRC’s personal tax account or business tax account could
    or should be used to make claims or elections that are not made in returns?
  14. Are there any issues that arise in relation to claims or elections made outside of a person’s
    employment or self-employment (such as gift aid claims)?
  15. Are there situations where there is a choice between claims that can be made or where
    multiple claims interact, that are particularly complex or that distort behaviour?
  16. 16. To what extent do you think those that are entitled to such relief are aware of this? Does
    this vary by employment sector?
  17. Have you ever encountered any difficulties in making a claim for relief for employee
    expenses? Please provide details.
  18. Do you think that the processes for making such a claim are clear and proportionate?
  19. Please provide any suggestions you may have for improving the processes for making a
    claim for employee expenses of any particular type.
  20. Do you think that it would be beneficial for some reliefs (such as flat rate expenses) to be
    given automatically, for example through an employer? Please provide any suggestions you
    may have for how this could work effectively in practice.
  21. Are there any issues that arise in relation to the activities of high volume repayment agents
    in this area?
  22. Are there any aspects of the process of making a claim for capital allowances (other than
    identifying which expenditure is eligible for the allowances) that you think are complex or
  23. Are there any administrative aspects of capital allowance claims that you find overly time
    consuming, for example short life asset elections?
  24. Are the time limits in which you can make and amend a claim clear, and fit naturally with
    the processes for making and amending tax returns?
  25. Are there any issues that arise with respect to ‘disclaiming’ (delaying the use of) available
    capital allowances? Is it still necessary or desirable for this to be possible?
  26. Have you ever encountered any difficulties or complexities in making a s198 election?
  27. The OTS has heard that very often a nominal amount is apportioned to fixtures when
    making the election. Would it potentially be simpler for S198 elections to be removed, for
    example, by having a nominal or nil amount apportioned to fixtures as standard? Please
    provide any other suggestions you may have.
  28. Are there any difficulties or complexities that arise in the processes for claiming relief for
    losses? Are there any aspects of the process that are particularly time consuming?
  29. Do these or other areas of VAT which involve claims or elections cause particular difficulties
    for your business? If so, do you have any suggestions as to how these could be addressed?

Tell us how you are affected