Time-limits for assessments and claims have been aligned as part of HMRC’s review of its powers. The new time-limits are fully operational from 1st April 2009. The period from 1st April 2009 to 31st March 2010 will be a transitional period.

 

The existing and new time-limits are as follows:-

 

 

 

 

 

 

Income tax and CGT

 

 

Corporation tax

 

 

VAT

 

 

New

 

 

Assessments and claims

 

 

5 years and 10 months

 

 

6 years

 

 

3 years

 

 

4 years

 

 

Assessment – careless behaviours

 

 

5 years and 10 months

 

 

6 years

 

 

3 years

 

 

6 years (4 years for VAT)

 

 

Assessments – deliberate behaviours

 

 

20 years and 10 months

 

 

21 years

 

 

20 years

 

 

20 years

 

 

Assessments – failure to notify

 

 

20 years and 10 months

 

 

21 years

 

 

20 years

 

 

20 years

 

 

Assessments – undisclosed avoidance scheme

 

 

20 years and 10 months

 

 

21 years

 

 

20 years

 

 

20 years

 

 

Call KinsellaTax NOW on 0800 471 4546.

 

IT, CGT and CT Transition

The new time-limits provided in FA 2008, Sch. 39 do not come into effect until 1st April 2010. If HMRC wish to raise an extended time-limit assessment before that date they must be able to show that the taxpayer was guilty of fraud or neglect.

 

As a result of the new time-limits, some assessable years will become out of date for assessment on 1st April 2010:-

 

    • In cases where there is no carelessness, two years of assessment will become out of date for assessment.

 

    • In cases involving negligent or careless conduct, the time-limit for assessment will fall from 20 years to 6 years

 

    • Claims that had a six-year time-limit will have a four-year limit so two years will become out of time immediately.

 

 

Call KinsellaTax NOW on 0800 471 4546.

 

Time-Limits

Visits to Taxpayers

 

For visits between 1st April 2009 and 31st March 2010 taxpayers can be required to produce VAT records dating back to 1st April 2006 if the business started before that date.

 

Extended Time-Limit

 

The 20-year extended time-limit continues to apply but the circumstances in which it applies have changed.

 

For accounting period ending on or before 31st March 2006 assessments could only be made using the 20 year extended time-limit for periods when tax was lost:-

 

    • Due to dishonest evasion

 

    • Where a person has been convicted of fraud or

 

    • Where there was a failure to notify liability to register without reasonable excuse

 

For accounting periods ending after 31st March 2006 the extended time-limit applies:-

 

    • Where VAT has been lost due to the deliberate behaviour of the taxpayer, or someone acting on their behalf.

 

    • For certain failures to notify, irrespective or behaviour.

 

Failure to Notify Liability to Register

 

Before 1st April 2009 if there a person failed to notify liability to register for VAT and had a reasonable excuse, assessments were restricted to three years as a matter of policy.

 

Where an assessment is made as a result of a failure to notify liability to register for VAT on or after 1st April 2010 the extended time-limit applies regardless of here being a reasonable excuse for the failure.

 

Failure to Notify Avoidance Schemes

 

There will be a new 20 year extended time-limit in cases where a person has failed to notify an avoidance scheme for periods ending on or after 1st April 2010. This will apply to VAT, income tax, corporation tax and capital gains tax.

 

Call KinsellaTax NOW on 0800 471 4546.

VAT Transition

Until 31st March 2009 the normal time-limit for assessments and claims for VAT was three years. This will gradually increase to four years from 1st April 2009 until 31st March 2010. From that date, assessments and claims will be able to be made back to 1st April 2006 unless the extended 20 year limit applies.

The old transitional and new rules are:-

 

Old rules

 

 

Transitional rules

 

 

New rules

 

 

Up to 31st March 2009

 

 

From 1st April 2009 until 31st March 2010

 

 

From 1st April 2010

 

 

Time-limit is 3 years

 

 

Assessments cannot be made for accounting period ending earlier than 1st April 2006

 

 

Time-limit is 4 years

 

 

Call KinsellaTax NOW on 0800 471 4546.

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