HMRC proposes extending the assessment time limit to a minimum of 12 years for mistakes or non-deliberate errors involving offshore income, gains or chargeable transfers. The proposal is both impractical and unnecessary.
The proposed extension of time limits relating to offshore matters is widely viewed as unnecessary and alarming. HMRC could have up to 12 years to investigate individuals with any connections to ‘offshore matters’, even where reasonable care is taken. Therefore, this is looking far beyond tax evaders and could severely impact those who are fully UK tax compliant.
If these measures were rolled out to corporates, we predict a major headache for business, especially in transactions such as a sale or merger, with uncertain tax costs for up to 12 years. They would also result in increased record keeping costs.
The extension would seem to require records be kept for 12 years, whereas the current requirements are only six years. However, HMRC has not addressed this in the consultation. Also, most businesses are currently dealing with the implementation of GDPR, and these changes appear contradictory.
Giving HMRC up to 12 years to investigate could simply result in inspectors dragging their heels on enquiries due to the extra time they have. Clearly, this would be completely unsatisfactory.
We are calling for safeguards for taxpayers if these changes are introduced. We expect draft legislation in summer 2018, along with the consultation response document. We hope HMRC will take into consideration the strong feeling amongst the tax profession in considering these measures.
Of course, we fundamentally support HMRC’s action to tackle tax evasion. However, HMRC already has wide ranging civil and criminal sanctions to tackle evasion, both onshore and offshore. The extent of new information sharing internationally means that HMRC now has better data than it has ever had. This data is more easily analysed and cross referenced through advances in IT.
Our view is that hardened tax evaders need to be caught: enforcement of the existing rules is the answer, rather than more new rules.
The consultation closed on 14 May. Details are available at bit.ly/2sLBryG.
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Consultation on extension of offshore time limits
HMRC proposes extending the assessment time limit to a minimum of 12 years for mistakes or non-deliberate errors involving offshore income, gains or chargeable transfers. The proposal is both impractical and unnecessary.
The proposed extension of time limits relating to offshore matters is widely viewed as unnecessary and alarming. HMRC could have up to 12 years to investigate individuals with any connections to ‘offshore matters’, even where reasonable care is taken. Therefore, this is looking far beyond tax evaders and could severely impact those who are fully UK tax compliant.
If these measures were rolled out to corporates, we predict a major headache for business, especially in transactions such as a sale or merger, with uncertain tax costs for up to 12 years. They would also result in increased record keeping costs.
The extension would seem to require records be kept for 12 years, whereas the current requirements are only six years. However, HMRC has not addressed this in the consultation. Also, most businesses are currently dealing with the implementation of GDPR, and these changes appear contradictory.
Giving HMRC up to 12 years to investigate could simply result in inspectors dragging their heels on enquiries due to the extra time they have. Clearly, this would be completely unsatisfactory.
We are calling for safeguards for taxpayers if these changes are introduced. We expect draft legislation in summer 2018, along with the consultation response document. We hope HMRC will take into consideration the strong feeling amongst the tax profession in considering these measures.
Of course, we fundamentally support HMRC’s action to tackle tax evasion. However, HMRC already has wide ranging civil and criminal sanctions to tackle evasion, both onshore and offshore. The extent of new information sharing internationally means that HMRC now has better data than it has ever had. This data is more easily analysed and cross referenced through advances in IT.
Our view is that hardened tax evaders need to be caught: enforcement of the existing rules is the answer, rather than more new rules.
The consultation closed on 14 May. Details are available at bit.ly/2sLBryG.
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