The Income Tax (Interest Relief) Regulations 1982

Annual claims

13.—(1) An annual claim for the lender's financial year may not be made at any time more than 6 years after the end of the financial year.

(2) Except where in relation to any financial year a lender repays all the payments made to it on relevant interim claims, it shall within 1 year after the end of the financial year make an annual claim to establish the amount deductible for that financial year.

In this Regulation `relevant interim claim' means, in relation to a financial year, an interim claim for a period falling wholly or partly within that financial year.

(3) The annual claim shall, unless the lender makes an election under paragraph (4), include only the tax deducted from interest payments made by borrowers during the financial year to which the claim relates and may not be based on an estimate.

(4) Where however a loan is secured on a freehold or leasehold estate in respect of property in relation to which the loan is made, the lender may in respect of any such loan elect to include in an annual claim the amount of tax deductible in respect of interest payments due from the borrower in the year, but always excluding amounts of tax deductible in respect of interest written off as a bad debt in the accounts of the lender for the financial year to which the claim relates.

(5) (a) Where in a tax year before the passing of the Act imposing tax for that year any deduction has been made in accordance with section 26 from a payment of interest at a rate in excess of the rate of tax ultimately so imposed, the lender may include in his annual claim the amount of the excess not recovered where—

(i) the loan has been repaid before the passing of the said Act, and

(ii) the lender has not been able to recover from the borrower the excess so deducted by the end of its financial year or within 6 months of the deduction whichever is the later.

(b) The amount included in respect of the excess shall be repaid to the lender by the Board as if it were an amount deductible from relevant loan interest in accordance with section 26 and the Board shall be entitled to recover from the borrower the amount so repaid in the same manner as tax charged by an assessment on the borrower which has become final and conclusive.

(6) An annual claim shall bring into account payments made on relevant interim claims, and shall apportion as may be necessary any payment made on such a claim for any period falling partly in a different financial year; and for the purpose of this Regulation the “aggregate of the relevant interim payments” means the aggregate of the payments made (and not repaid) on relevant interim claims but excluding any part of a payment relating to a different financial year.

(7) Where the aggregate of the relevant interim payments shown by an annual claim exceeds the amount deductible for the financial year shown on the claim, the lender shall repay the amount of the excess to the Board with the claim.

(8) If a lender fails to make an annual claim required under paragraph (2) within the time limited by that paragraph, the Board may issue a notice to the lender showing the aggregate of the relevant interim payments for the year, and stating that the Board are not satisfied that the amount due to the lender for the year exceeds the lower amount stated in the notice.

(9) If an annual claim is not delivered to the Board within 14 days after the issue of such a notice under paragraph (8) the amount of the difference between the aggregate and the lower amount stated in the notice shall immediately be recoverable by the Board in the same manner as tax charged by an assessment on the lender which has become final and conclusive.

(10) Where an annual claim has been made and the lender subsequently discovers that an error or mistake has been made in the claim the lender may make a supplementary annual claim within the time allowed in paragraph (1).