IHTM30465 - Limitation of liability by lapse of time: offshore matter and offshore transfers
Section 81 of the Finance Act 2019 introduced IHTA84/S240B, extending the time limit for recovering additional tax to twelve years in circumstances where the loss of tax involves either
- an offshore matter, or
- an offshore transfer which makes the lost tax significantly harder to identify.
The provisions take effect for chargeable transfers taking place on or after
- 1 April 2013, where the loss of tax was brought about carelessly by a person liable for the tax, or a person acting on behalf of such a person;
- 1 April 2015, in any other case.
Where the loss of tax was brought about deliberately the twenty year time limit in IHTA84/S240(5) still applies (IHTM30462).
The extended time limit applies for Income Tax and Capital Gains Tax as well as Inheritance Tax and further information on the general application of the time limit can be found in the relevant section of the Compliance Handbook beginning at CH53505.
The guidance in the Compliance Handbook includes definitions of terms such as ‘offshore matter’, ‘offshore transfer’ and ‘significantly harder to identify’.
It is important to note that the extended time limit will not apply if HMRC received ‘relevant overseas information’ from which it could reasonably have been expected to become aware of the lost tax, IHTA84/S240B(7). In this context ‘relevant overseas information’ means information provided to HMRC by an authority outside the UK, such as under EU law, or an agreement to which the UK and another territory are parties, such as one of the Inheritance Tax Double Taxation Conventions (IHTM27161). For further information see CH53550.