Press release: HMRC wrong to overlook taxpayers’ disclosures, says ATT

These extended time limits will not apply if, before the normal time limit, HMRC receive information from an overseas tax authority under automatic information exchange procedures which means that they could reasonably have been expected to be aware of the lost tax.  However, the ATT is concerned that its suggestion to HMRC² that the extended time limits should also be excluded where the taxpayer themselves provides such information in a full and frank disclosure before the normal time limit, has not been accepted.

ATT said treating taxpayer-provided information in the same way as information received under automatic exchange would produce a win-win scenario for HMRC.

Jon Stride, Co-Chair of ATT’s Technical Steering Group, said:

“The legislation as currently drafted means that a taxpayer may make a full and accurate disclosure in respect of their overseas tax affairs before the expiry of the normal time limit but still be subject to the extended 12-year time limit. 

“It is unclear why information provided by the taxpayer should be accorded less importance than that received from third parties under automatic exchange. If sufficient information is received from the taxpayer in time for HMRC to raise an assessment by the normal deadline, it is difficult to see why that taxpayer should be treated any less favourably than where the equivalent information has been acquired from a third party.

“Treating taxpayer-provided information in the same way as information received under automatic exchange would produce a win-win scenario - taxpayers would have a strong incentive to make a full and early disclosure of relevant information, and HMRC would benefit from the earlier receipt of that detailed and specific information, speeding up the assessment and collection of the tax due.

“It is very disappointing that the ATT’s practical and simple suggestion has not been taken up, and we intend to make a submission to the Finance Bill Committee along these lines.”

Notes for editors

1. Under the new rules, with effect from 6 April 2019 for Income Tax and Capital Gains Tax and 1 April 2019 for Inheritance Tax, the time limit for assessing tax in the cases covered by the proposal will be extended to 12 years. 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. The extended time limits 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.
   
   The legislation introducing the new rules is included at sections 79 (Income Tax and Capital Gains Tax) and 80 (Inheritance Tax) in Finance (No. 3) Bill.
   
    
2. The ATT’s submission to HMRC in respect of the draft Finance Bill legislation for the extended time limits was published in July 2018 can be found.