Time expiration limits on self assessments and enquires

[underthecosh]

Thank you for putting my mind at rest, sir. No, it was at the end of 2009 that, despite me thinking I'd done everything I could to ensure the arrangements I had were valid, it appeared that things might be about to get rocky. I'd been a 'victim' of the whole IR35 fiasco in 2000ish where my accountant messed things up and cost me a lot of money and I didn't want something similar happening again. Typical!

I've always maintained that if one pays for professional advice and follows it (which I did both in 2000 with my accountant and from 2005-2009 with my previous employer) then there should be some sort of comeback on those giving the advice - no? I mean, if I pay a plumber to put in a bath for me and the next day it bursts and floods the house, then I can get my money back/sue/etc. You pay an accountant to make sure you're paying the right amount of tax but, they don't then guess what, it's you in the dock! If I knew how the tax system worked, I wouldn't be paying someone else to do it for me!

Anyway, rant over. Thanks again for replying. I value your opinion highly but, I also know that nothing is certain with HMRC. Ta.

[webberg]

I was a member of an EBT loan arrangement from 2005 - 2009. I received a 9a enquiry letter in 2007 for the return year 2005/2006. I passed this letter onto my employer who said that there was nothing to worry about and that they would clear things up with HMRC. I have heard nothing since on this enquiry from either my employer or HMRC.

I stopped using the arrangements in 2009 and have never entered into anything like that since. In 2012 I received a 'discovery assessment' for return year 2008/2009. Again, I passed this onto my (by now ex-) employer who, once again told me that I had nothing to worry about and that I had nothing to pay.

However, time has gone on and on and on and, as one who knows little about how such things turn out and with no resolution in sight, I decided to sign-up for the Contractor Loan Settlement scheme and have agreed a loan settlement with HMRC which I have to pay in the next couple months.

Reading this forum, I'm now not sure whether HMRC were right to issue a discovery on the same arrangement 5 years after they'd raised an enquiry. At the same time, I just want to be able to sleep at night so, if I pay up for the year 'in discovery', can I get on with the rest of my life or will this come back in 10/15/20/100 years time to haunt me once again?

Thanks for listening.

If you've accepted the CLSO, then all periods to 2010/11 are cleared away and unless you have committed some form of fraud, HMRC cannot revisit those periods.

For 2011/12 onwards, the dice is yet to be rolled.

[underthecosh]

Where do I stand?

I was a member of an EBT loan arrangement from 2005 - 2009. I received a 9a enquiry letter in 2007 for the return year 2005/2006. I passed this letter onto my employer who said that there was nothing to worry about and that they would clear things up with HMRC. I have heard nothing since on this enquiry from either my employer or HMRC.

I stopped using the arrangements in 2009 and have never entered into anything like that since. In 2012 I received a 'discovery assessment' for return year 2008/2009. Again, I passed this onto my (by now ex-) employer who, once again told me that I had nothing to worry about and that I had nothing to pay.

However, time has gone on and on and on and, as one who knows little about how such things turn out and with no resolution in sight, I decided to sign-up for the Contractor Loan Settlement scheme and have agreed a loan settlement with HMRC which I have to pay in the next couple months.

Reading this forum, I'm now not sure whether HMRC were right to issue a discovery on the same arrangement 5 years after they'd raised an enquiry. At the same time, I just want to be able to sleep at night so, if I pay up for the year 'in discovery', can I get on with the rest of my life or will this come back in 10/15/20/100 years time to haunt me once again?

Thanks for listening.

[webberg]

Absolutely correct.

Have a look at this which I think is a very decent summary of where we are:

http://www.taxchambers.com/wp-conten...w-11.11.14.pdf

It's not by me (I only wish I could write as lucidly) and may not have the very latest cases from the last few months, but is well worth a read.

[demby]

"The rules that apply where a self assessment has already been made embody the principles established in case law and in particular in the case of Scorer v Olin Energy Systems Limited [58 TC p592]. Unless the loss of tax has been brought about carelessly or deliberately, if the information 'discovered' was already in the officer's possession when the self assessment became final, HMRC have no right to make a discovery assessment."

"So, HMRC are not able to raise discovery assessments simply because they have changed their practice in relation to the treatment of some particular item."

"So a change of opinion on information that has previously been made available to HMRC is not grounds for a discovery."

A few interesting quotes from the HMRC web page

[webberg]

If the assessment has been issued and the calculation is based solely on the tax return and accompanying P11D can a discovery be opened?

In other words no new information has been discovered or used to calculate the assessment.

Further more - any claim that a scheme is being used would have been known at the time due to a previous year enquiry already being open. So the fact you are using a scheme is nothing new as well.

Rocktron - looks like it is a discovery assessment. Send it to your adviser to make an appeal. If you don't have one , either get one or send a letter yourself saying you want to appeal and postpone the tax.

Demby - how long have you got?

There does not need to be "new information" to make a discovery assessment. It could be that a different HMRC Inspector decides that the original view of liability was incorrect.

You have though exposed one CRITICAL issue that we raised with HMRC recently and which will be a major issue to resolve.

Where contractors have had a 9A enquiry opened in a prior year and then a discovery assessment followed by more 9A notices, we consider the discovery assessment to be vulnerable.

We discussed this with HMRC last week and will be pursuing it very hard.

[demby]

If the assessment has been issued and the calculation is based solely on the tax return and accompanying P11D can a discovery be opened?

In other words no new information has been discovered or used to calculate the assessment.

Further more - any claim that a scheme is being used would have been known at the time due to a previous year enquiry already being open. So the fact you are using a scheme is nothing new as well.

[rocktronAMP]

Thanks very much webberg.

I think this letter, then, is discovery assessment, which means for year end 2013 is open to 2017.

There are many posts in the forum on this point.

HMRC can raise an enquiry within 12 months of submission of a return for a particular year.

If they fail to do so, they can raise (they say) a discovery assessment within 4 years of the year end.

If you have not submitted a tax return for a year (or have a NIL return), HMRC can ask you within 4 years of that year end to submit a return.

[rocktronAMP]

Thanks that was very useful

here are some guidelines

Under section 9A TMA, HMRC may enquire into a taxpayer's self assessment return if they notify the taxpayer of their intention to do so:

• up to the end of the period of 12 months after the day on which the return was delivered if the return was delivered on or before the filing date;
• up to and including the quarter day next following the first anniversary of the day on which the return was delivered if the return was delivered after the filing date;
• up to and including the quarter day next following the first anniversary of the day on which the amendment was made if the return was amended.

However, under section 29(1) TMA, HMRC can make an assessment to make good a loss of tax if they 'discover' that there has been an under-assessment because:

...

[webberg]

There are many posts in the forum on this point.

HMRC can raise an enquiry within 12 months of submission of a return for a particular year.

If they fail to do so, they can raise (they say) a discovery assessment within 4 years of the year end.

If you have not submitted a tax return for a year (or have a NIL return), HMRC can ask you within 4 years of that year end to submit a return.

[LandRover]

Hello all

Are they expiration limits on HMRC enquires and/or self assessments?

I am trying to find the relevant UK legislation on the following:

A letter arrived with a self assessment year end 2012. Because we are now in November 2015, is this letter now outside a limit? or expired?

A self assessment is not the same as an official enquiry. Is this assumption correct?

here are some guidelines

Under section 9A TMA, HMRC may enquire into a taxpayer's self assessment return if they notify the taxpayer of their intention to do so:

• up to the end of the period of 12 months after the day on which the return was delivered if the return was delivered on or before the filing date;
• up to and including the quarter day next following the first anniversary of the day on which the return was delivered if the return was delivered after the filing date;
• up to and including the quarter day next following the first anniversary of the day on which the amendment was made if the return was amended.

However, under section 29(1) TMA, HMRC can make an assessment to make good a loss of tax if they 'discover' that there has been an under-assessment because:

• any income or chargeable gain that ought to have been assessed to tax has not been assessed, or
• an assessment to tax is, or has become, insufficient, or
• any relief that has been given is, or has become, excessive.

If a taxpayer has submitted a tax return, HMRC's power to make a discovery assessment is restricted by sections 29(2) and 29(3) TMA. In the present case, only section 29(3) was relevant. Section 29(3) prevents an assessment unless one of the following applies:
the under-assessment is attributable to fraudulent or negligent conduct by the taxpayer or a person acting on his behalf (section 29(4) TMA);2 or
based on information available to him, an HMRC officer could not reasonably have been expected to be aware of the situation mentioned in section 29(1) of TMA 1970 when he notified the taxpayer that he had completed his enquiries into the return in question; or the period for notifying an intention to begin an enquiry expired (section 29(5) TMA).
Under section 29(6) TMA, information is made available to an HMRC officer for the purposes of section 29(5) TMA if it is:

• contained in the taxpayer's return for the relevant tax year, or in any accounts, statements or documents accompanying the return, or
• contained in any claim for the relevant tax year by the taxpayer acting in the same capacity as that in which he made the return, or in any accounts, statements or documents accompanying any such claim, or
• contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an HMRC officer, the taxpayer produces or provides to the officer, or
• information the existence of which, and the relevance of which as regards the situation mentioned in section 29(1) TMA, an HMRC officer could reasonably be expected to infer from information falling within the first three categories above; or the taxpayer notifies in writing to an HMRC officer.

[rocktronAMP]

Hello all

Are they expiration limits on HMRC enquires and/or self assessments?

I am trying to find the relevant UK legislation on the following:

A letter arrived with a self assessment year end 2012. Because we are now in November 2015, is this letter now outside a limit? or expired?

A self assessment is not the same as an official enquiry. Is this assumption correct?