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Tax officials are entitled to investigate a tax return after the usual one-year limit has passed if their discovery assessment letter meets one of two tests, according to a recent Court of Appeal ruling that reaffirms a long-established power for the taxman.
Derek Hankinson v HM Revenue & Customs focused on whether HM Revenue & Customs (HMRC) used a section of tax law correctly – section 29 of the Taxes Management Act 1970 – when it investigated the Self Assessment tax return of the taxpayer, Hankinson, for the tax year 1998-1999 – six years after it was filed.
In 2005 HMRC assessed Hankinson tax return for 1998-1999. The taxman said Hankinson owed £30m in income tax and capital gains tax for 1998-1999 because he was still a resident in the UK for tax purposes, despite having moved to the Netherlands.
Tax certainty is everything in a democracy. Six years post filing but why did HMRC stop there - why didnt they go back to 1987 or the day he started work? The problem here is they will do it once too often and a large number of companies will simply exit the UK. HMRC will be sitting there wondering where all the tax revenues have gone!!.
I got a nice letter from them just before Xmas with copies of letters opening enquiries unfortunately
hmmm, i wonder if them not replying means they are struggling to find originals and/or are recalculating stuff on the basis of not having sent them originally!!! fingers crossed
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