Offshore assessment time limits

Provisions exist under Section 36A Taxes Management Act 1970 which extend the ‘normal’ time limits to at least 12 years to assess any tax that is due in respect of offshore or overseas matters.

The extension is from the normal four, six and 20-year time limits for onshore non-compliance for mistakes that arise innocently, carelessly or deliberately. The effect is that HMRC can triple / double the number of years assessable against a taxpayer who has made an innocent or careless error.

HMRC's reasoning for increasing the offshore assessment time limit stems from the argument that it requires a lot more time to gather facts on offshore structures and investments, which may stretch back for many years and can be complex.

The increased assessment window works in conjunction with the Failure to Correct (FTC) penalties which came into force with effect from 1 October 2018 which will be levied at a minimum of 100% of the tax due [maximum 200% of the tax due].

What action do you need to take?

Clients need to review their overseas tax affairs to confirm that they are compliant with current UK legislation. If they are not, they need to make a disclosure with the assistance of Crowe’s Tax Resolutions team.

How can we help?

Crowe can help by ensuring that the legislative requirements for an extension to apply are valid, and challenge HMRC if there is any doubt. This could save many thousands of pounds.

Contact us for expert advice on how to make sure you are compliant.