Taxes Management Act 1970 Schedule 1AB paragraph 8

Contract settlements

Paragraph 8 deals with how overpaid tax claims work where an amount has been paid under a contract settlement in connection with income tax or capital gains tax, particularly where the person who made the payment is not the same person as the taxpayer from whom the tax was believed to be due.

• Amounts paid under a contract settlement in connection with income tax or capital gains tax believed to be due count as payments of tax for the purposes of overpayment relief claims
• Where the payer and the taxpayer are different people, certain safeguards and exclusions that normally apply to the claimant are extended to cover the taxpayer as well
• HMRC may set off any amount repayable to the payer against any amount found to be payable by the taxpayer through a discovery assessment or determination arising on the same grounds
• A contract settlement is defined as an agreement relating to any person's liability to make a payment to HMRC under legislation