CH275700 - How to do a compliance check: Transitional arrangements for Time Limits for Assessments and Claims: Income Tax, Capital Gains Tax and Corporation Tax transition

Changes to the time limits for IT, CT and CGT will apply to claims and assessments made on or after 1 April 2010.

Direct tax officers making assessments or dealing with claims during the period 1 April 2009 to 31 March 2010 will need to follow the guidance relating to time limit rules as they existed before Schedule 39 FA 2008.

If you make extended time limit assessments for tax periods ending before 1 April 2010 where

• there has been a failure to notify chargeability, or
• a disclosable tax avoidance scheme

you must be sure that fraud or neglect was involved.

If you are carrying out compliance checks into IT, CT or CGT you will need to be aware of potential assessable years falling out of date on 1 April 2010 and ensure that necessary assessments and determinations are in place before 31 March 2010. In cases where we accept there is no carelessness, two years will fall out of time for assessment. In cases of suspected negligent or careless conduct, the assessing time limit will fall from 20 years to 6 years.

You will also need to ensure persons are aware that once 31 March 2010 has passed, claims that had a 6-year time limit will have a 4-year time limit. Two years will fall out of time immediately.

However, HMRC has introduced transitional arrangements so that non-SA taxpayers who can make claims can do so under the old time limits - generally 5 years from 31 January following the end of the tax year - until 1 April 2012, see CH51550.