What is the time limit for claiming foreign tax credit relief on overlap profit under section 22(2) of TIOPA 2010?

Under section 23 of TIOPA 2010, a claim for credit relief on overlap profit must be made no later than five years after the 31 January following the relevant tax year. For example, for the 2023/24 tax year, the deadline would be 31 January 2030. Failure to claim within this period means the relief is permanently lost.

Is foreign tax credit relief on overlap profit granted automatically under TIOPA 2010?

No, relief under section 22(2) of TIOPA 2010 is not automatic. The taxpayer must actively submit a formal claim within the prescribed time limit. Without a valid claim made on or before the statutory deadline, the entitlement to further credit relief for foreign tax on overlap profits will be forfeited entirely.

How is the claim deadline calculated when overlap profit spans more than one tax year?

When the relief relates to multiple tax years, the deadline is calculated by reference to the later or latest of those tax years. This means the five-year period runs from the 31 January following the later year, giving the taxpayer additional time and ensuring they are not disadvantaged by the overlap spanning multiple periods.

Can you give an example of the extended deadline for a section 22(2) claim involving two tax years?

If a sole trader has overlap profits relating to both 2022/23 and 2023/24, the deadline is based on the later year, 2023/24. The 31 January following that year is 31 January 2025, so the claim must be submitted by 31 January 2030. If only 2022/23 were relevant, the deadline would be 31 January 2029.

Taxation (International and Other Provisions) Act 2010 section 23

Time limits for claims for relief under section 22(2)

Section 23 sets out the time limits within which a taxpayer must make a claim for credit relief in respect of foreign tax already allowed on overlap profit.

Relief for foreign tax on overlap profit under section 22(2) is not automatic — a formal claim must be made.
The claim must be submitted no later than five years after the 31 January following the relevant tax year.
Where relief spans more than one tax year, the deadline is extended to five years after the 31 January following the later (or latest) of those tax years.
Failure to claim within the prescribed time limit means the relief will be lost.

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