Special relief is a last resort claim that lets HMRC reduce or repay tax charged by a determination when it is too late to displace the determination by filing the return. It exists under paragraph 3A of Schedule 1AB to the Taxes Management Act 1970 (paragraph 51BA of Schedule 18 to the Finance Act 1998 for companies) and succeeds only if HMRC agree that collecting the determined amount would be unconscionable, your other tax affairs are up to date, and you have not used the relief before.

What problem does special relief solve?

When a Self Assessment return is not filed, HMRC can issue a determination of the tax due. There is no appeal against it; the remedy is to file the return within the later of three years from the filing date and 12 months from the date of the determination. Once those windows close, the determined figure is the legal liability, even if the true tax was much lower.

Before 1 April 2011 HMRC sometimes accepted a lower sum in these cases under a non statutory practice called equitable liability. HMRC’s Self Assessment Claims Manual (SACM12210) explains that from 1 April 2011 this was replaced by statutory special relief, and HMRC no longer accept new equitable liability requests.

When can you claim special relief?

Paragraph 3A(1) applies where:

  • a determination has been made under section 28C TMA 1970 of income tax or capital gains tax, and you believe the tax is not due (or was not due, if paid); and
  • relief under the ordinary overpayment relief rules in Schedule 1AB would be available except that the claim falls within Case C (you could have used another remedy within a time limit that has expired and knew or should have known of it), Case F(a) (the amount was paid or is payable because of enforcement proceedings) or more than four years have passed since the end of the tax year.

Where Case F(a) is the obstacle, the relief is only available if you were neither present nor legally represented in the enforcement proceedings. SACM12220 adds two practical points: special relief applies only to amounts charged in determinations where no other statutory remedy is available, and unlike overpayment relief there is no time limit for making the claim.

What are the three conditions?

Even when paragraph 3A applies, HMRC are not obliged to give relief unless conditions A, B and C in paragraph 3A(4) to (6) are all met.

Condition A: recovery would be unconscionable

In HMRC’s opinion it must be unconscionable to recover the amount, or to keep it if already paid. SACM12240 defines unconscionable as completely unreasonable or unreasonably excessive, and stresses that the relief is a final and exceptional remedy. The fact that the determination is higher than the return would have shown is not, on its own, enough. The claim must explain why recovery would be unconscionable and why the return was not filed within the time limit for displacing the determination.

HMRC give examples of circumstances that may support a claim: the person needs extra support; they did not receive HMRC’s notices for reasons outside their control; or they are insolvent, where pursuing the inflated figure would be to the detriment of other creditors. HMRC say relief will not normally be given where someone:

  • registered as self employed, never traded and did not tell HMRC or file a nil return;
  • ceased trading and moved without giving HMRC a forwarding address;
  • was a construction industry scheme subcontractor who assumed deductions covered the tax and ignored determinations;
  • moved abroad and ignored HMRC correspondence until enforcement; or
  • knew of their obligations but ignored all communications.

Condition B: other affairs up to date

Your tax affairs must otherwise be up to date, or arrangements must be in place to HMRC’s satisfaction to bring them up to date as far as possible. SACM12250 reads this widely. It covers every tax and duty HMRC deal with, including VAT, PAYE and National Insurance, and extends to the affairs of any partnership you belong to and any company you have controlled. Outstanding returns, unanswered information requests and unpaid tax, interest and penalties all count, whether or not you have a reasonable excuse for them. A Time to Pay arrangement for other debts may be the way to satisfy this condition.

Condition C: first claim

You must not have relied on paragraph 3A before, whether or not the earlier claim succeeded, unless the circumstances are exceptional (paragraph 3A(6) and (7)). SACM12260 extends this in practice to anyone who previously sought equitable liability, describes the relief as a final opportunity to get affairs in order, and says HMRC expect exceptions to be very rare.

How does HMRC treat people who need extra support?

SACM12245 recognises that long term conditions such as mental illness and learning difficulties may stop someone dealing with their tax affairs. To support a claim, the condition will normally need to have been present throughout the period from the issue of the determination to the end of the time limit for displacing it. HMRC may ask for evidence of the nature of the condition, how it affects day to day activities and managing tax affairs, and the period affected, from a doctor, a mental health professional or a social care professional. Where that evidence shows the condition affected the person throughout the period, HMRC’s guidance says relief should be allowed.

For companies, HMRC say it is unlikely a determination will qualify because one director needs support, since other directors would be expected to manage the company’s tax affairs, though there may be exceptional cases where the company depends entirely on one director.

How do you make a claim?

The claim is made under the general claims rules in Schedule 1A TMA 1970 and, under paragraph 3A(8), must include the information and documents reasonably needed to decide whether conditions A, B and C are met. SACM12230 says the claim must be signed by the person making it and that HMRC’s Enforcement Insolvency Service decides whether it can be accepted. A well prepared claim usually includes:

  1. the completed returns, or full figures, for each year covered, showing what the correct liability would have been;
  2. an explanation of why the returns were not filed in time and why recovery of the determined amount would be unconscionable;
  3. evidence supporting that explanation, such as medical reports or proof of address changes;
  4. confirmation that all other returns and payments are up to date, or details of the arrangements agreed to bring them up to date.

What happens to penalties and interest?

SACM12270 says that fixed late filing penalties remain payable after special relief, and daily penalties are not disturbed even if the tax is reduced to nil. Any dispute about the proportionality of daily penalties is handled separately. Surcharges and interest are reduced to reflect the tax due after relief.

A worked example

Illustration only. A sole trader stopped trading after a serious mental health crisis and did not file returns for two years. HMRC issued determinations totalling £14,000 and the time limits to displace them expired. With help from a family member, she now files the missing returns showing actual liabilities of £2,500, provides a psychiatrist’s letter covering the whole period from the determinations to the expiry of the time limits, confirms her later returns are filed and agrees a payment plan for the £2,500. On these facts she is a strong candidate: the correct liability is evidenced, the reason for not filing is outside her control and lasted throughout, her affairs are being brought up to date and it is her first claim. She would still owe the fixed late filing penalties.

What are the common mistakes?

  • Claiming only that the determination is too high. That is never enough by itself.
  • Explaining why returns were late originally but not why nothing was done during the whole window for displacing the determination.
  • Overlooking other outstanding obligations, such as an unfiled VAT return or a company you controlled, which can defeat condition B.
  • Using special relief for a small amount when a later, larger problem may arise. It is normally available only once.
  • Assuming it applies to other kinds of assessment. It is limited to determinations; an out of time discovery assessment or closure notice needs a late appeal instead.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.