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As announced as part of the 2017 Budget measures, HMRC are proposing to extend the tax assessment time limit for non-deliberate offshore non-compliance. Draft legislation was issued on 6 July for consultation.

The draft clauses now make it clear that the measure will only apply to individuals, trustees and others liable to Income Tax, Capital Gains Tax or Inheritance Tax despite HMRC considering applying the measure to corporation tax.

As a result of the introduction of the new clauses the time limit for assessing non-deliberate non-compliance will increase to 12 years, an increase from the current time limits of 4 or 6 years (where the loss of tax is due to carelessness). Where the taxpayer has deliberately attempted to evade tax, the time limit will remain at 20 years.  

Details of new draft clauses

These new changes will take effect from Royal Assent of Finance Bill 2018-19 and will impact Income Tax and Capital Gains assessments from 2013- 2014 for cases where loss of tax is due to carelessness, and from 2015-2016 all other cases. The rules will apply for Inheritance Tax purposes to chargeable transfers taking place after 1 April 2013, where loss of tax is due to carelessness, and 1 April 2015 for other cases.