Time limits and behaviour

The end of the tax year is often a time when advisers will see an increase in assessments issued by HMRC. There are a number of criteria that need to be met for assessments to be valid and one of these is that they have to be issued in time.

The time limits governing assessments change depending on ‘behaviour’ of the taxpayer and ‘source’ of the underpaid tax as well as whether we are discussing inaccurate tax returns or a failure to notify.

Unless otherwise stated this article refers to rules in relation to self-assessment income tax and capital gains tax for individuals. Broadly speaking the same rules apply to companies – for example in terms of behaviour of directors – however the time limits may relate to financial years instead of tax year.

Inaccurate returns

Let’s look first at time limits for inaccurate returns.

UK source tax...