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HMRC issues protective assessments ahead of 5 April deadline


Published: 16 Mar 2021 Update History

Under the “Requirement to Correct” legislation HMRC has until 5 April 2021 to raise assessments of tax owed on offshore income that individual taxpayers have not disclosed under the worldwide disclosure facility. HMRC is therefore issuing many such assessments in the coming weeks, an example of which has been shared with ICAEW’s Tax Faculty.

The Worldwide Disclosure Facility began on 5 September 2016 and enabled taxpayers to make a voluntary disclosure of previously undisclosed offshore income to HMRC by 30 September 2018. Cases were settled by way of a contract settlement under which taxpayers self-assessed their penalty and the majority of disclosures made this way have not resulted in an in-depth enquiry.

Under the Requirement to Correct (RTC) legislation, HMRC can assess offshore amounts reported to it, for example under the common reporting standard, that were not corrected by the taxpayer on or after 30 September 2018. This is done via a protective assessment issued by letter. HMRC has until 5 April 2021 to issue these letters and has confirmed that a number of these are being issued over the next few weeks. 

HMRC has confirmed to ICAEW’s Tax Faculty that the issue of an assessment does not mean that it cannot continue to engage with agents or taxpayers to agree a tax position for those years. HMRC is urging taxpayers that want to continue discussions to get in touch.

If a taxpayer does not agree with the tax liability shown in the assessment it is important that the taxpayer or their agent writes to HMRC to appeal it. A taxpayer’s right to appeal, and to ask for a postponement of tax, is the same as for other assessments.

The letter and accompanying information being sent to affected taxpayers explain:

  • the years which HMRC wishes to protect;
  • the tax due;
  • how to make a payment; and
  • what taxpayers should do if they disagree.

Where there is an agent acting for the taxpayer, HMRC will also send a copy to the agent.

HMRC has shared an example letter to help agents and taxpayers familiarise themselves with what to expect, however, letters will be tailored to individual circumstances, particularly where there is an ongoing compliance check.

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