HMRC Want Even Longer Time Limit When Investigating Offshore Investments

HMRC earlier this week issued a consultation paper proposing to extend the number of years it use to investigate and recover lost taxes on income, chargeable transfers and gains from previously undisclosed, although not deliberately, offshore investments.

HMRC is seeking views on introducing legislation to implement a new minimum tax assessment time limit of 12 years for HMRC to make assessments or notices of determination in cases involving offshore income, gains or chargeable transfers.

HMRC is extending the time limit because it can take much longer to establish the facts about offshore transactions, particularly if they involve complex offshore structures.

More time is needed to address situations where the current assessment time limits of 4 and 6 years for offshore non-compliance are not long enough to establish the facts, and determine and assess the amount of tax due.

Comment

It makes sense where investigations are complex to allow a longer period although we suggest there should be categorisation where complex structures such as offshore international business companies inside offshore trusts with anonymous directors may need more time, indeed it can be up to a 20 years’ time limit for deliberately withholding information or taxes unpaid, but for simpler cases the 4-6 limit for uncomplicated offshore income, gains or chargeable transfers and estate/inheritance tax issues and where tax liabilities have been settled should remain.