HMRC have published a consultation on Extension of Offshore Time Limits, which looks at giving HMRC twelve years in which to raise assessments where there is “non-deliberate offshore non-compliance”.

Currently, a Discovery Assessment can be raised up to four years after the end of the tax year, extended to six years if HMRC can demonstrate carelessness. If the underlying inaccuracy was deliberate, the time limit is twenty years

  • The proposals extend the four and six year time limits to twelve years if the error involves offshore tax.
  • The reason for the proposed change is that it is difficult for HMRC to find information on offshore matters and so a longer discovery period is desireable.
  • It will apply only for Income Tax, Capital Gains Tax and Inheritance Tax but will apply to any periods that are in time for Discovery in April 2019.
  • There are apparently no plans to extend the time limit for repayments.

Offshore tax is defined as “offshore matters” and “offshore transfers” as described in the Requirement to Correct rules. Where an inaccuracy includes both UK and offshore aspects the tax should be apportioned on a just and reasonable basis.

Responses should be submitted by 14 May 2018. New legislation is expected to be included in Finance Bill 2018-19.


Specific Questions:

Q1: In addition to the taxes above, what (if any) other taxes (for example, CT) should we look to include within scope, and why?

Q2: Do you foresee any difficulties for extension to other taxes and are there any potential solutions to address these?

Q3: What are your views on the proposed definitions?

Q4: What are your views on the proposed scope of the rule?

Q5: What are your views on the proposed commencement rule?

Q6: In your view, are there any other considerations that HMRC should take into account when considering the design of this measure?


Discovery Assessments

Offshore Evasion: Requirement to Correct

Consultation: Extension of Offshore Time Limits