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Offshore time limits

Offshore time limits

Recent meetings with HMRC have highlighted the potential application of the proposed extension of offshore time limits to corporations, not just individuals.

Chris Davidson

Tax Director

KPMG in the UK


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In February, HMRC opened a consultation on extending the assessment time limit in cases involving offshore income, gains, or chargeable transfers. The consultation proposed an extension of the current time limits of four and six years to a new minimum time limit of 12 years, with the Government citing the need for a longer time period due to the complexities involved in offshore structures and transactions, as well as recent high-profile news stories about information leaked from offshore ‘tax havens’. While it was initially thought that the consultation proposals would only apply to individuals, recent meetings with HMRC have suggested that the proposals relating to corporation tax could also be applied to mainstream corporate structures, not just corporate structures held by individuals.

At present, taxpayers and HMRC can recover tax that was inadvertently under/over-paid within four years; HMRC can only recover for two further years beyond this if the taxpayer was at fault, except where submission of the incorrect return was deliberate when HMRC have twenty years. This enables taxpayers to achieve certainty fairly quickly, which is a key factor for businesses and directors. The extension of the current time limits to 12 years would mean an increase of eight years on the current time limits, even when the taxpayer is not at fault, representing a substantial increase in the time it will take to achieve tax certainty. It would also break the parity that currently exists between taxpayers and HMRC, given that there is no proposal to extend Overpayment Relief beyond four years. This risks damaging the competitiveness of the UK at a time when it is most needed.

The consultation is open until 14 May 2018. We would recommend that any businesses who may be affected take the opportunity to make representations to HMRC, either separately or by getting in touch with one of the named contacts below.

For further information please contact:

Chris Davidson

Derek H Scott

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