COM71040 - Enquiries: CTSA enquiries: making jeopardy amendments

This subject is presented as follows

Background

During the course of an enquiry, you can make a Jeopardy Amendment (Word 29KB) to amend the company’s self assessment (Word 28KB) if you believe that

• The self assessment understates the company’s true tax liability, and
• There is likely to be a loss of tax to the Crown unless the assessment is amended at once. (Para 30 Sch 18 FA 98)

The self assessment is amended, for all purposes, when you give written notice to that effect to the company.

This is not a routine procedure. You must read the guidance in the Enquiry Manual at EM1951 - EM1955 before making a Jeopardy Amendment.

You should only make a Jeopardy Amendment where there is a real risk of the loss of substantial amounts of tax. (For example, where omissions of taxable profit may have been established but the company has refused to make payment on account of a final settlement, and there is information suggesting that it is about to go into liquidation or remove assets abroad.)

Note: The company can appeal against such an amendment, and seek postponement of tax, but the appeal cannot be heard until the enquiry has ended.

See the Enquiry Manual at EM1951 - EM1955 for guidance on Jeopardy Amendments.

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Enquiry into return for the wrong period

If the return under enquiry was made for the wrong period, you must not amend the computer record to show the AP for which a return should have been made before using Function RAMA to prepare your Jeopardy Amendment.

The Para 30 power to amend the company's self assessment during enquiry does not extend to designating the period for which the return should have been made. You can only do that in the Closure Notice under Para 32(2) or (3). (For more information, see subject ‘Enquiry Into Return For The Wrong Period’ (COM71060).)

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Function RAMA (Record / Amend Assessment)

You can use Function RAMA, ‘Prepare a Jeopardy Amendment’ option, to make a Jeopardy Amendment for any live AP

• Where a self assessment exists (on the live AP or any linked superseded AP)
• Which is currently the subject of an enquiry
• With no informal discharge present on it
• Where the last valid action on the AP was to

• • Record a Self Assessment
  • Correct a Return
  • Record a Taxpayer Amendment
  • Process a Claim
  • Prepare a Jeopardy Amendment

For most companies, there will normally be only one assessment (Word 29KB) for each AP - the original self assessment - though there may be a number of amendments to it. COTAX initially shows you the details for the last issued assessment version for the AP.

When you have confirmed the changes, COTAX

• Records the Jeopardy Amendment to the self assessment
• Issues a ‘Notice of amendment of self assessment during enquiry into company tax return’ to the company

• • Showing the date of issue
  • Showing the amended figures
  • Carrying an appropriate ‘jeopardy’ message

• • And
    

• • With a payslip attached

• Automatically makes or amends any tax-related (Word 30KB) penalty determination based on the amended assessment if it can, otherwise it enters the case on the PENR Work List (Penalty Requiring Review List) for manual review

Once you have used Function RAMA to make a Jeopardy Amendment you cannot alter it before it is issued, or stop its issue.

If there are exceptional circumstances which mean that there would be a loss of tax if you did not immediately deliver the notice of Jeopardy Amendment to the company, rather than wait for service by post, you should prepare and issue the notice manually. See the Enquiry Manual at EM1954 which provides the correct form of words to use.

Note: If you need to issue the notice before the due date for the AP under enquiry replace 'NOW', in the phrase 'Any tax shown is due NOW', with 'on or before .......', inserting the due date for the AP under enquiry.

You will then need to update the computer record with the details of the Jeopardy Amendment but suppress assessing output (Word 27KB). See section ‘Manual Assessments’ (COM20150) in the ‘Assessing’ business area which tells you how do that.

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Example Form

You can see an example of Jeopardy Amendment printed output in COM by following these steps

• Select Index Of Forms, from the menu on the left of the screen
• Use the scroll bar to find CT620, then [CT620(ASA)]
• Select the hyperlink. Acrobat Reader opens and displays the example form

For a list of forms relevant to this subject, see COM71021.

For a list of functions to use in particular situations, see COM71011.

For legislation applying to this subject, see COM71012.