954 Making of assessments

Summary

This section is concerned with the making of assessments. In general, formal tax assessments are to be made only when a chargeable person has delivered a return. The assessments are to be made, in the first instance, by reference to that return. Estimated assessments can be made where no return is made or where the return has been made but the inspector is not satisfied with it or has received information that it is insufficient in some way. In the case of such estimated assessments or where a chargeable person calculates (and has paid) the tax due for a chargeable period and the calculation is accepted by the inspector, the notice of assessment is required to show only the tax to be paid. The section preserves the inspector’s right to make assessments under certain provisions outside of the Self Assessment system.

Details

Timing of assessments

(1) An assessment cannot be made on a chargeable person for a chargeable period until after the return filing date, unless the person has made a return before that date. Also, the making of an assessment for a chargeable period is subject to the 4-year rule for the making of assessments in section 955(2). [A 4-year time limit applies only in circumstances where a chargeable person delivers a return with a full and true disclosure of all material facts necessary for the making of an assessment. If the return does not contain such a full and true disclosure then no time limit applies to the making of an assessment.]

Assessment based on return

(2) In general, an assessment on a chargeable person is made by reference to the particulars contained in the person’s return.

Right to make an estimated assessment

(3) Where a person fails to make a return or the inspector is dissatisfied with a return made or has received information as to its insufficiency, the inspector has the right to make an estimated assessment under section 919(4) or section 922.

Option not to assess

(4) Where an inspector is satisfied that the full liability to tax of a chargeable person for a chargeable period has been paid, the inspector can elect not to make an assessment. In such cases the inspector must notify the chargeable person, who is then treated as having discharged the liability as if an assessment had been made. The decision not to make an assessment in these circumstances does not, however, preclude the inspector from making an assessment at a future date. This is subject to the 4-year rule for the making of assessments in section 955(2), which applies only in circumstances where a chargeable person delivers a return with a full and true disclosure of all material facts necessary for the making of an assessment.

Details to be shown in a notice of assessment

(5) Where an inspector makes either an estimated assessment or an assessment based on the chargeable person’s own computation and this computation is accepted by the inspector, the only detail necessary to be shown in the notice of assessment is the tax to be paid.

Request for assessment by chargeable person

(6) A chargeable person who has filed a return may request the inspector to make an assessment and the inspector is, subject to the 4 year rule in section 955(2), obliged to comply with the request.

Assessments outside the Self Assessment system

(7) An inspector may make an assessment to capital gains tax on foot of certain transactions giving rise to a liability to capital gains tax. The purpose of such assessments is to recover capital gains tax —

• where a shareholder has received a capital distribution from a company (section 977),
• from the recipient of a gift where the donor of the gift, being liable to capital gains tax as a result of the disposal, has not paid the tax (section 978), and
• where in the disposal of an asset some of the consideration is held by a purchaser in circumstances where the vendor does not have a tax clearance certificate (section 980).

Relevant Date: Finance Act 2019