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Finance (No3) Bill 2018 contains draft legislation in respect of the proposed extension of offshore time limits relating to income tax, capital gains tax and inheritance tax.

The legislation, as drafted, will increase the time allowed for HMRC to raise an assessment for non-deliberate non-compliance from the current 4 years (or 6 years where there has been careless non-compliance) to 12 years. The existing time limit of 20 years will remain in place where there has been deliberate non-compliance. The rules will apply where there has been a loss of tax involving an offshore matter or a loss of tax involving an offshore transfer which has made the lost tax significantly harder to identify.  

However, concerns have been expressed over the introduction of the clauses. In particular the CIOT has commented that ‘the case for a large and broadly applied increase in time limits has not been made and risks resulting in unfairness for taxpayers’.

More recently, Lord Forsyth, the Chair of the House of Lords Economic Affairs Finance Bill Sub-committee wrote to the Chancellor of the Exchequer recommending that the clauses be withdrawn from the Finance Bill. In his letter, Lord Forsyth comments on the absence of the first stage of the consultation process for policy making, the lack of consideration of alternatives to the extension and the 12 year time limit itself and raises concerns about the removal of the distinction between fully compliant and careless taxpayers. Lord Forsyth’s letter can be read in full here.

The clauses are subject to consideration by the Finance Bill Committee over the coming weeks.