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HMRC internal manual

Debt Management and Banking Manual

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HM Revenue & Customs
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Debt and return pursuit - Landfill Tax (LT): time limits for making assessments

The power to assess (for example, prime assessment) is section 50 (1) of the Finance Act 1996.

There are time limits for making assessments. The Errors & Assessments Policy Team has policy responsibility for time limits for assessments.

One year rule

Section 50 (5)(b) of the Finance Act 1996. Assessments made in the absence of a return or an acceptable return, officer assessments and assessments in cases of overpayments of tax, must be made within 1 year of the time when facts emerged to justify the making of the assessment.

Alternatively, there are also the following rules.

Two years rule

The assessment, including assessments for penalties or interest, must be made within 2 years of the end of the prescribed accounting period or relevant period (s.50 (5)(a) and paragraph 33 (2) of Schedule 5 to the Finance Act 1996.

Three years rule

This rule applies in all cases where the 1 year, 2 years, and 20 years rules do not apply. Under paragraph 33 (1) of Schedule 5 to the Finance Act 1996, no assessment shall be made more than 3 years after the end of the relevant prescribed accounting period. And, under paragraph 33 (5)(a) of Schedule 5 to the Act, no assessment shall be made more than 3 years after the death of a debtor.

Twenty 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 (paragraph 33 (4) of Schedule 5 to the Finance Act 1996).