Press release: HMRC’s extended time limit proposal needs a gatekeeper

The Association of Taxation Technicians (ATT) is recommending the inclusion of a safeguard in the design of the extension to 12 years of the period in which HMRC can raise an assessment where unintended offshore non-compliance is discovered.

At the November 2017 Budget, the Government announced that the assessment time limit for non-deliberate offshore tax non-compliance will be increased to at least 12 years after the end of the relevant tax year. This contrasts with the existing time limits under which HMRC normally have four years after a tax year in which to issue an assessment or six years where the taxpayer had failed to exercise reasonable care.

In its response1 to HMRC’s consultation2 on the design of the legislation, ATT is recommending the inclusion of a mechanism to ensure that the extended 12-year period only applies in situations where it is needed in order for HMRC to gather the relevant information and determine the tax liability that has to be assessed.

ATT’s suggested procedure would require HMRC to notify a taxpayer of their intention to apply the 12-year provision. That would then give the taxpayer the opportunity to appeal to HMRC (and if necessary to the tax tribunal) and seek to demonstrate why the extended time limit was not needed.

Michael Steed, Co-Chair of ATT’s Technical Steering Group, said:

“We completely understand that HMRC’s enquiries into elaborate offshore structures can be very complex and time-consuming – particularly if they meet with resistance. However, that does not mean that all situations involving any offshore element will encounter those problems. Many might take no longer than a comparable enquiry which involved no offshore element and therefore have no need of an extended assessing period.

“These proposals only apply where the offshore non-compliance was non-deliberate, in other words where the mistake had arisen either despite the taxpayer having taken reasonable care or because the taxpayer was careless. We are not talking here about deliberate non-compliance.3

“We think that the gatekeeper type mechanism which we have set out in our response would not only ensure that the extended time limit was available to HMRC when it was needed, it could also encourage early co-operation by taxpayers and accelerate the progress of enquiries which include an offshore element.”

Notes for editors

  1. ATT’s response to HMRC’s consultation is here.
  2. HMRC’s consultation document is here. HMRC is proposing that with effect from 6 April 2019 for Income Tax and Capital Gains Tax and 1 April 2019 for Inheritance Tax (and Corporation Tax if included), the time limit for assessing tax in the cases covered by the proposal will be extended to 12 years. This will apply to any year that is still in date for assessment when the new legislation comes into effect. The new legislation will not apply retrospectively, so any year for which the time limit has expired before 6 April 2019 will not be affected.
  3. The existing assessing time limit for deliberate non-compliance is 20 years.


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