CH53560 - Assessing Time Limits: Extended time limits: 12 year time limit for offshore matters and offshore transfers: When the time limit takes effect - income tax, capital gains tax and inheritance tax
The 12 year time limit only applies for income tax, capital gains tax, and inheritance tax involving offshore matters or offshore transfers.
Income Tax and Capital Gains Tax
For income tax and capital gains tax, the offshore extended time limit, see CH53100, applies to any assessment made for tax year 2015-16 onwards. It can also apply for the tax years 2013-14 and 2014-15 if the lost tax in question resulted from carelessness. The 12 year extended time limit does not apply to earlier tax years.
The 20 year time limit continues to apply where tax has been under-assessed or under-declared as a result of deliberate behaviour.
For example
If you are making assessments under TMA70/S36A to make good a loss of income tax or capital gains tax involving an offshore matter or an offshore transfer due to careless behaviour
- on 1 April 2019 you would be able to assess all years back to and including 2013-14
- on 5 April 2025 you would be able to assess all years back to and including 2013-14
- on 5 April 2026 you would be able to assess all years back to and including 2013-14
- on 6 April 2026 you would be able to assess all years back to and including 2014-15. The time limit for 2013-14 ran out on 5 April 2026.
If you are making assessments under TMA70/S36A to make good a loss of income tax or capital gains tax involving an offshore matter or an offshore transfer where there has been no careless or deliberate behaviour
- on 1 April 2019 you would be able to assess all years back to and including 2015-16
- on 5 April 2025 you would be able to assess all years back to and including 2015-16
- on 6 April 2025 you would be able to assess all years back to and including 2015-16
- on 5 April 2028 you would be able to assess all years back to and including 2015-16
- on 6 April 2028 you would be able to assess all years back to and including 2016-17. The time limit for 2015-16 ran out on 5 April 2028.
Example
It is 5 April 2025 and an officer is making offshore tax assessments as part of their enquiry. The officer can demonstrate careless behaviour by the taxpayer or another person acting on the taxpayer’s behalf, see CH53200, so they make assessments for all years back to and including 2013-14.
In the same scenario, if the officer was unable to show careless behaviour by the taxpayer or the taxpayer’s representative they would only be able to make discovery assessments for all years back to and including 2015-16.
It takes the officer longer than anticipated to gather all the facts from offshore jurisdictions so they don’t have the information they need to make discovery assessments until 6 April 2028. The officer can make assessments to recover the underpaid tax for all years back to and including 2016-17 because the loss of income tax involves an offshore matter or offshore transfer and they have made their discovery after the 6 April 2028. The officer cannot make an assessment for 2015-16 because the time limit for that tax year expired on 5 April 2028 and they have been unable to establish deliberate behaviour in relation to the loss of tax.
Inheritance Tax
For inheritance tax, the offshore extended time limit, see CH53100, applies to any assessment made in respect of chargeable transfers taking place on or after 1 April 2015. It can also apply to chargeable transfers taking place on or after 1st April 2013 if the lost tax resulted from carelessness. The 12 year extended time limit does not apply to chargeable transfers taking place in earlier tax years.