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Tax Management Act v Limitation Act

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Tax Management Act v Limitation Act

Postby Scienke » Wed May 24, 2017 9:41 am

As I understand it the taxes management act 1970 (amended under schedule 39 of the finance act 2008) states that HMRC have 4 years to collect back tax if an employer has failed to deduct tax. 6 years in the case of carelessness. And 20 years in the case of fraud.

TMA 1970

1 TMA 1970 is amended as follows.

2 In section 28C(5)(a) (time limit for determination of tax where no return delivered and self-assessment superseding determination), for “five years” substitute “3 years”.

3 In section 29(4) (assessment where loss of tax discovered), for “is attributable to fraudulent or negligent conduct on the part of” substitute “was brought about carelessly or deliberately by”.

4 In section 30B(5) (amendment of partnership statement where loss of tax discovered), for “is attributable to fraudulent or negligent conduct on the part of” substitute “was brought about carelessly or deliberately by”.

5 In section 33(1) (claim for error or mistake), for “not later than five years after the 31st January next following” substitute “not more than 4 years after the end of”.

6 In section 33A(2) (error or mistake in partnership return), for “not later than 31st January of Year 6” substitute “not more than 4 years after the end of the year of assessment in question, or in which the relevant period ends,”.

7 (1) Section 34 (ordinary time limit for assessments) is amended as follows.

(2) In subsection (1), for “not later than five years after the 31st January next following” substitute “not more than 4 years after the end of”.

(3) Accordingly, in the heading, for “six years” substitute “4 years”.

8 In section 35 (time limit: income received after year for which it is assessable), for “within six years after” substitute “not more than 4 years after the end of”.

9 (1) Section 36 (fraudulent or negligent conduct) is amended as follows.

(2) For subsection (1) substitute—

“(1) An assessment on a person in a case involving a loss of income tax or capital gains tax brought about carelessly by the person may be made at any time not more than 6 years after the end of the year of assessment to which it relates (subject to subsection (1A) and any other provision of the Taxes Acts allowing a longer period).

(1A) An assessment on a person in a case involving a loss of income tax or capital gains tax —

(a) brought about deliberately by the person,

(b) attributable to a failure by the person to comply with an obligation under section 7, or

(c) attributable to arrangements in respect of which the person has failed to comply with an obligation under section 309, 310 or 313 of the Finance Act 2004 (obligation of parties to tax avoidance schemes to provide information to Her Majesty’s Revenue and Customs),

may be made at any time not more than 20 years after the end of the year of assessment to which it relates (subject to any provision of the Taxes Acts allowing a longer period).

(1B) In subsections (1) and (1A) references to a loss brought about by the person who is the subject of the assessment include a loss brought about by another person acting on behalf of that person.”


http://www.hmrc.gov.uk/gds/ch/attachments/sch_39.htm

However, Section 37(2) of the limitation act 1980 appears to suggest that there is no limitation as to how far back HMRC can go to recover tax.



37 Application to the Crown and the Duke of Cornwall.

(1)Except as otherwise expressly provided in this Act, and without prejudice to section 39, this Act shall apply to proceedings by or against the Crown in like manner as it applies to proceedings between subjects.
(2)Notwithstanding subsection (1) above, this Act shall not apply to—
(a)any proceedings by the Crown for the recovery of any tax or duty or interest on any tax or duty;
(b)any forfeiture proceedings under the customs and excise Acts (within the meaning of the M1Customs and Excise Management Act 1979); or
(c)any proceedings in respect of the forfeiture of a ship.In this subsection “duty” includes any debt due to Her Majesty under section 16 of the Tithe M2Act 1936, and “ship” includes every description of vessel used in navigation not propelled by oars.


Yet section 39 of the limitation act 1980 also says

39 Saving for other limitation enactments.

This Act shall not apply to any action or arbitration for which a period of limitation is prescribed by or under any other enactment (whether passed before or after the passing of this Act) or to any action or arbitration to which the Crown is a party and for which, if it were between subjects, a period of limitation would be prescribed by or under any such other enactment.


http://www.legislation.gov.uk/ukpga/1980/58

Does section 39 of the limitation act mean that the tax management act (as amended under schedule 39 of the finance act 2008) takes priority over the limitation act?
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Re: Tax Management Act v Limitation Act

Postby atticus » Wed May 24, 2017 10:10 am

Yes
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Re: Tax Management Act v Limitation Act

Postby Scienke » Wed May 24, 2017 11:33 am

Thought so. Thanks.
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