HMRC has published draft legislation that will extend the discovery time limits for assessment of offshore income and gains.

The new measures extend the period in which HMRC can raise Discovery assessments for non-deliberate errors involving offshore tax from four or six years to twelve years.

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.

HM Treasury will introduce the changes to take effect from April 2019. 

  • It will cover income tax, capital gains tax and inheritance tax
  • It extends the time limit for raising assessments involving offshore tax to twelve years except where a longer period (20 years for deliberate behaviour) applies.
  • It will apply to the four years still in date at 6 April 2019 (2015/16) together with the two earlier years in cases where there has been careless behaviour (2013/14).
  • The definitions of offshore are aligned with those in the 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.

HMRC has aso 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 the 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 rule 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 to this 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 and the draft Finance Bill here.


Consultation: Extension of offshore time limits 

Discovery assessments

Offshore income toolkit


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