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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: Environmental Taxes: Aggregate Levy (AL): Power to recover assessed amounts as tax due

The power to assess (e.g. prime assessment) is paragraph 2 (1) of Schedule 5 to theFinance Act 2001).

Time limits for making assessments

A debt reported for recovery action must be capable of being enforced. There are timelimits for the making of assessments.

Take into account the following time limits when making assessments because otherwise theassessments will not be valid.

1 year rule Paragraph 4 of Schedule 5 to the Finance Act 2001. Assessments made in the absence of a return or an acceptable return, officers assessments, must be made within 1 year of the time when facts emerged to justify the making of the assessment.
2 years rule The assessment must be made within 2 years of the end of the prescribed accounting period.
3 years rule This rule applies in all cases where the 1 year, 2 years, and 20 years rules do not apply. No assessment shall be made more than 3 years after the end of the relevant prescribed accounting period.
20 years rule Where a person has been convicted of fraud, or tax has been lost through evasion, or civil penalties have been issued for failure to register, the time limit for making assessments is extended up to 20 years after the end of the accounting period.

In the event of the death of the person liable to a civil penalty, an assessment may bemade up to 3 years after the death of that person.

Ordinary interest and penalty interest charges

We charge a combination of ordinary interest and penalty interest (compound interest)for late payment of AL.

Where a person is liable for interest, we may assess the amount due by way of interest andnotify it to him accordingly.

Where an amount is assessed and notified to any person, it shall be recoverable as if itwere aggregate levy due from him (paragraph 12 (3) of Schedule 5 to the Finance Act 2001).

Further information

If you require further information contact the Errors & Assessments Policy Team.