Assessing Time Limits: Extended time limits: 12 year time limit for offshore matters and offshore transfers: Relevant overseas information
You should check the other guidance available on GOV.UK from HMRC as Brexit updates to those pages are being prioritised before manuals.
The 12 year time limit only applies for income tax, capital gains tax, and inheritance tax involving offshore matters or offshore transfers.
The 12 year time limit will not apply if HMRC received relevant overseas information
- which reasonably enables HMRC to become aware of and assess the lost tax before the normal time limits expire, and
- it is reasonable to expect HMRC to assess the lost tax before the normal time limits expire.
For income tax, capital gains tax and inheritance tax ‘relevant overseas information’ is any information received by HMRC from an authority in a territory outside the United Kingdom under
- any tax provision of EU law, or
- agreement between the United Kingdom and any territory or territories outside the UK.
Relevant information will include, for example, that received under the Common Reporting Standard (CRS) and under exchange of information articles included in tax treaties.
How to check whether HMRC received relevant overseas information
There are two databases that may confirm whether HMRC received relevant overseas information. Before raising any extended time-limit assessment, caseworkers should send an email with details of the taxpayer to these two mailboxes:
ukcompetentauthority@hmrc.gov.uk
These mailboxes are for internal use only and should not be disclosed externally.
The caseworker should insert “12 Year Offshore Extended Time Limit check“ in the subject line of their email and include the following information, if known, with their request:
1. Taxpayer name, address and UTR
2. Any other name, for example trading name, partnership, etc.
3. The overseas jurisdiction
4. The tax year or reporting period in question
If either team confirm that HMRC has received relevant overseas information but that the information is no longer available, the caseworker and authorising officer will need to consider all the other facts of the case before deciding whether to raise an offshore extended time limit assessment.
Example 1 - Where relevant overseas information is received but HMRC fails to act on this
Mr K is a higher rate taxpayer who has filed a tax return every year since 2020. In 2031, data received from another jurisdiction shows an offshore bank account in Jersey with a balance of £50,000 at 31 December 2030 and interest of £500.
Mr K declared income from other offshore bank accounts in the years up to and including 2029-30 and 2030-31 but did not declare any interest income from Jersey.
HMRC subsequently find that relevant overseas information was also received for the 6 previous years showing the account and interest received. The information was accurate, identified Mr K precisely and HMRC agreed that Mr K had taken reasonable care. HMRC failed to tie up the relevant overseas information with Mr K’s returns. In these circumstances the exclusion in TMA70/S36A(7) applies and HMRC is restricted to assessing 4 years.
Example 2 - An offshore matter where HMRC could not reasonably have been expected to be aware of a tax loss from the data held. Common Reporting Standard information initially triggers no tax risk but this isn’t the full picture
HMRC receives two CRS reports showing that Ms Z had offshore bank account interest of £5,500. HMRC checks Ms Z’s tax return, which shows £5,500 interest, so everything appears to match. No enquiry is opened into that return.
HMRC discovers 8 years later that Ms Z actually received total overseas interest of £7,500 (£5,500 CRS interest and £2,000 non-CRS interest). HMRC opens an enquiry and Ms Z explains she made a mistake when completing her tax return. In addition to the £5,500 interest from the CRS bank account Ms Z now agrees that she also received £2,000 bank interest from a separate offshore bank account that was not reported through CRS.
Ms Z accepts that she under-declared her offshore income by £2,000 in her tax return 8 years ago. The tax is outside the 4 and 6 year assessing time limits. In these circumstances HMRC can make an assessment under the offshore time limit. The rule, at TMA70/s36A(7), would not apply because HMRC received some but insufficient relevant CRS data, and could not reasonably have been expected to become aware of the lost tax from that data alone.