Time Limits for Assessments and Claims

If HMRC want to collect Tax from you or your business, following a tax enquiry, they usually need a Tax Assessment first.  There are strict time limits in which they can issue an Assessment to you.  But they can claim tax off you for the last 20 years!  There is also a time limit for you to make a Claim to them; e.g. to utilise losses.
The current rules are complicated and vary from tax to tax (e.g. they are different for PAYE and Corporation Tax).  Broadly: for VAT HMRC can go back 3 years, and for all other taxes they can go back about 6 years.  But where they say you have been Negligent they can go back up to 21 years.  New rules apply to most taxpayers from 1st April 2010, with transitional arrangements from 1 April 2009.
The new basic rules for PAYE, Income Tax, Capital Gains Tax and Corporation Tax and VAT are "behaviour" driven.  If HMRC believe you have been under-assessed to tax they can make further assessments in the following time limits; depending on what behaviour of yours they believe caused the under-assessment:

  • Four years: the normal time limit, in all cases, even innocent error;
  • Six years: Careless Error (except for VAT which is 4 years);
  • Twenty  years: Deliberate Error; Failure to Register for VAT, Failure To Notify chargeability to tax, Failure To Notify tax avoidance schemes.

The time limit for taxpayer Claims is four years.

If you need advice and help in a tax dispute where HMRC want to assess an earlier year or refuse your claim then call Lynam Tax now on: 0845 643 9997 or email partners@lynamtax.co.uk

For more information about the new Time Limits for Assessments and Claims click here for our news article: New Tax Compliance Checks Regime: HMRC warning: 3rd March 2009.


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