Income Tax: time limits for Self Assessment
Published 9 December 2015
© Crown copyright 2015
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/income-tax-time-limits-for-self-assessment/income-tax-time-limits-for-self-assessment
Who is likely to be affected
Customers who have been asked by HM Revenue and Customs (HMRC) to submit a Self Assessment tax return through a notice to file.
General description of the measure
This measure clarifies the time allowed for making a self-assessment. This is 4 years from the end of the tax year to which the self-assessment relates. This is the same time limit as for assessments by HMRC.
Policy objective
The measure seeks to make clear the amount of time a customer has to submit a self-assessment. This seeks to create clear boundaries for customers so that they have certainty over their tax affairs and to ensure that the tax system applies fairly to all.
Background to the measure
Earlier in 2015 there was a legal challenge (The Queen (oao Andrew Michael Higgs) v HMRC) to HMRC’s long-standing interpretation of the time limits for self-assessment. This found that HMRC’s interpretation was not correct and that there was no time limit for self assessments.
Further to the decision that HMRC’s guidance was not correct, there was some uncertainty for customers about how long they had to submit a self-assessment. The government is changing the legislation to ensure that there is a clear answer to this and that there is a fair and level playing field for customers.
Detailed proposal
Operative date
The measure will have effect on and after 5 April 2017 although there are transitional arrangements for years previous to this as follows:
- for tax years prior to 2013 customers will have until 5 April 2017 to submit a self-assessment
- for the tax year 2013 to 2014 customers will have until 5 April 2018 to submit a self-assessment
- for the tax year 2014 to 2015 customers will have until 5 April 2019 to submit a self-assessment
- for the tax year 2015 to 2016 customers will have until 5 April 2020 to submit a self-assessment
The 4 year time limit applies to everyone and those that are currently outside the time limit have notice to put in their self-assessment by 5 April 2017.
Current law
The current law is contained at section 34 of the Taxes Management Act 1970 (TMA).
Proposed revisions
Legislation will be introduced in Finance Bill 2016 to revise section 34 TMA 1970 to distinguish that it does not refer to a self-assessment.
It will also introduce new section 34A TMA 1970 which will set out the time limits for self assessments solely. This will state that individuals have 4 years from the end of the tax year to submit a tax return when they have been served a notice to do so by HMRC. It will make clear this will not apply when other statutory time limits apply.
Summary of impacts
Exchequer impact (£m)
| 2015 to 2016 | 2016 to 2017 | 2017 to 2018 | 2018 to 2019 | 2019 to 2020 | 2020 to 2021 |
|---|---|---|---|---|---|
Repaying any overpayments reported through self-assessments received more than 4 years after the end of the tax year to which it relates is expected to cost approximately £30 million. The Office for Budget Responsibility has included this in its forecast.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure is likely to affect fewer than 40,000 individuals (and households) and the impact on affected individuals (and households) is anticipated to be negligible.
The measure is not expected to impact on family formation, stability or breakdown.
Equalities impacts
While HMRC does not have specific equality rated information for those who submit self-assessments very late, we can assume that there will be some members of the public who have not submitted them due to significant life events who we would consider need extra support. There is tailored support for this group in HMRC’s Needs Enhanced Support Team and HMRC Collection and Management discretion can be applied, where appropriate, in exceptional circumstances.
Otherwise, we would expect that the remaining population would be representative of the Self Assessment population.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses and civil society organisations. Businesses will incur a one off cost as they familiarise themselves with the legislation and this is expected to be negligible. This measure is not expected to create any additional ongoing burdens for businesses.
Small and micro business assessment: small and micro businesses who are not incorporated are already obliged to submit tax returns through self-assessment. This change will make it clear the amount of time they have to submit this at the latest and will not involve any additional burdens for them.
Operational impact (HMRC)
There will be a small cost saving in HMRC although it is negligible.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be monitored through information collected from tax receipts and tax returns.
Further advice
If you have any questions about this change, please contact Abigail La Fontaine by email: sa.policy@hmrc.gsi.gov.uk