Revenue Note for Guidance

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Revenue Note for Guidance

955 Amendment of and time limit for assessments

Summary

The section is, in general, concerned with the amendment of assessments but sets out time limits for the making and amendment of assessments. Assessments must be made and amended within a period of 4 years of the end of the chargeable period in which a return is delivered in circumstances where the chargeable person has made a full and true disclosure in the return of all material facts necessary for the making of an assessment. [If a return does not contain such a full and true disclosure then the assessment can be made at any time i.e. the 4-year time limit does not apply.] Assessments can be amended outside this 4 year limit in circumstances where a return does not contain a full and true disclosure of all material facts necessary for the making of an assessment and in a number of other listed circumstances (see subsection (2)(b)).

Details

Amendment of assessment

(1) An inspector may at any time amend an assessment made on a chargeable person by making such alterations or additions as he or she considers necessary. This right is subject to the 4-year rule provided for in the section and subject to the time limits in section 1048 for the assessment of personal representatives of deceased taxpayers. The right to amend assessments applies despite the payment of tax under the original assessment and despite the fact that there may have been other amendments earlier. The chargeable person is to be given notice of the amended assessment.

Time limit for assessments

(2)(a) Where a return contains a full and true disclosure of all material facts necessary for the making of an assessment, the time limit for making or amending an assessment is 4 years after the end of the tax year or accounting period in which the return is made and no further tax can become payable after the end of that 4-year period. [There is, therefore, no time limit on the making of an assessment in circumstances where a return does not contain such a full and true disclosure. Circumstances in which the time limit does not apply to the amendment of an assessment are listed in subsection (2)(b).]

The provision goes on to provide that, in the case of repayments, a separate and distinct 4- year time limit applies. This limit is 4 years from the end of the tax year or accounting period for which the return is made (and corresponds with the 4-year time limit for making repayment claims under section 865(4)).

Non-application of time limit for amending an assessment

(2)(b) An assessment may be amended at any time—

  • where the return made does not contain a full and true disclosure of all material facts necessary for the making of an assessment,
  • in order to give effect to the determination of an appeal against an assessment,
  • to take account of a fact or matter arising from an event that happens after the making of a return,
  • to correct an error in calculation (e.g. in the assessment), or
  • to correct any factual mistake so as to align the assessment with the position as disclosed by the chargeable person.

The provision goes on to provide that tax may be paid or repaid as a result of the amendment notwithstanding the general time limits for making a claim for a repayment of tax set out in section 865(4)). The provision also provides that nothing in the section is to affect the operation of section 804(3), which sets time limits for the making and amendment of assessments in relation to the estates of deceased persons.

Right of appeal

(3) A chargeable person may appeal to the Appeal Commissioners against an assessment or an amendment of an assessment on the grounds that an inspector was precluded from making the assessment or the amendment because of the 4-year rule in subsection (2). If the appeal is successful, the assessment or amended assessment becomes void and, therefore, of no effect. If the appeal is unsuccessful, the assessment or amended assessment will stand good except to the extent that an amount or matter in the assessment is subject to a valid appeal on other grounds.

Expression of doubt

(4) Where a chargeable person is in doubt as to any matter to be included in a return, the person is to be treated as having made a full and true disclosure with regard to that matter if he/she draws the inspector’s attention to the matter in question by specifying the doubt held. This provision does not apply where the inspector or, on appeal, the Appeal Commissioners do not regard the doubt as genuine and consider that the person was acting with a view to the evasion or avoidance of tax. In such cases, a full and true disclosure with regard to the matter in question is deemed not to have been made by the chargeable person.

Additional assessments

(5) The provisions of section 919(5)(b) and 924, which provide for the making of additional assessments where an inspector discovers that there has been an omission from a first assessment, do not apply for Self Assessment purposes. Instead the inspector is authorised to make any necessary amendments to the original assessment(s) including the addition of a new income source, so as to ensure that the assessment(s) contains the correct tax for the chargeable period.

Relevant Date: Finance Act 2019