Time limits for assessment for offshore matters: At a glance.

At a glance

The discovery time limits for assessment of offshore income, capital gains and inheritance tax are extended from four or six years to twelve years from 6 April 2019.

The new measures extend the period in which HMRC can raise Discovery assessments for non-deliberate errors involving offshore tax.

This policy decision is made on the basis that it takes longer to establish the facts in cases involving offshore assets and structures as it can be more difficult to access the information needed to understand the transactions.

The changes to take effect from April 2019. 

  • They cover income tax, capital gains tax and inheritance tax but not corporation tax or indirect taxes.
  • They extend the time limit for raising assessments involving offshore tax to twelve years except where a longer period (20 years) for deliberate behaviour applies.
  • They apply to the four years still in date at 6 April 2019 (2015/16 or 1 April 2015 for IHT) together with the two earlier years in cases where there has been careless behaviour (2013/14 or 1 April 2013 for IHT).
  • The definitions of offshore are aligned with those in the requirement to correct (RTC) rules.
  • The 12 year time limit will not apply where HMRC has received information from another tax authority under automatic exchange of information including under the Common Reporting Standard (CRS)  in circumstances where they could reasonably have been expected to identify the lost tax and raise the assessment within the normal time limits.

Overview and examples

HMRC published ‘’Extension of offshore time limits – summary of responses” alongside draft legislation which extends the time limits in which HMRC can raise assessments where there is “non-deliberate offshore non-compliance”. This follows the consultation opened in February 2018 “Extension of offshore time limits”

  • The majority of respondents were not in favour of corporation tax being included in the measure and almost all said that the measure should not apply to rules concerning CFCs or transfer pricing.
  • Respondents were generally content with the proposed scope of the rules for cases where both offshore and onshore tax is involved and the proposed ‘just and reasonable apportionment’ of tax between the two.
  • Some respondents thought it unreasonable to extend the time limits once under Requirement To Correct (RTC)  and again under this measure. The government response is that RTC is a short-term measure and the two measures are intended to complement each other.

The full response document can be found here. The legislation is to be found at s80 and 81 of Finance Act 2019.

Treasury Review 30 March 2019

Section 95 FA2019 confirms that:

(1) The Chancellor of the Exchequer must review the effects of the changes made by sections 80 and 81 of FA2019 to TMA 1970 and IHTA 1984, and lay a report on that review before the House of Commons not later than 30 March 2019.

(2) The review under this section must include a comparison of the time limit on proceedings for the recovery of lost tax that involves an offshore matter with other time limits on proceedings for the recovery of lost tax, including, but not limited to, those provided for by Schedules 11 and 12 to the F(No. 2)A 2017 (the Disguised remuneration loan charge).

(3) The review under this section must also consider the extent to which provisions equivalent to section 36A(7)(b) of TMA 1970 (relating to reasonable expectations) apply to the application of other time limits.

The conclusion of the review was that the new time limits are a proportionate response to the challenges of offshore tax compliance.

  • It is not retrospective legislation and does not reopen closed years. The new rules increase the number of tax years potentially subject to assessment prospectively, from the existing limits of 4 or 6 years, one year at a time, until the period that HMRC can assess reaches 12 years.
  • A 12 year period was chosen arbitrarily, it is based on compliance data and has been identified as the optimum period for providing the most benefit to the Exchequer.
  • The new time limit will not apply where HMRC receives information from another jurisdiction which is sufficient to permit them to identify the lost tax and where it is reasonable for them to be able to make an assessment before the existing time limit has expired.
  • The 12-year time limit only applies where the offshore transfer makes the undeclared tax significantly harder to identify and does not apply to assessments arising from transfer pricing adjustments.

Links to our guides:

Consultation: Extension of offshore time limits 

Discovery assessments

Offshore income toolkit


Section 95 of the Finance Act 2019: report on time limits and the charge on disguised remuneration loans



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