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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: Climate Change Levy: power to assess tax due

The power to assess (for example, prime assessment) is paragraph 78 (1) of Schedule 6 to the Finance Act 2000). The Errors & Assessments Policy Team has responsibility for policy for assessments.

Time limits for making assessments

A debt reported for civil recovery action must be capable of being enforced. There are time limits for the making of assessments. In the event of the death of the person liable to a civil penalty, an assessment may be made up to three years after the death of that person. The Errors & Assessments Policy Team has policy for time limits for assessments.

One year rule

Paragraph 80 of Schedule 6 to the Finance Act 2000. Assessments made in the absence of a return or an acceptable return, officers assessments, must be made within one 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 must be made within two years of the end of the prescribed accounting period.

Three years rule

This rule applies in all cases where the one year, two years, and twenty years rules do not apply. No assessment shall be made more than three years after the end of the relevant prescribed accounting period.

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.

Time limit on assessments in respect of overpaid tax or interest

An assessment must be made within two years of the time when facts emerged to justify the making of the assessment.

Charging interest on these assessed amounts

Where an assessment is made under paragraphs 67 or 68 of Schedule 6 to the Finance Act 2000, the whole of the amount assessed will carry interest until payment is made (paragraph 70 of Schedule 6 to the Act). Penalty interest is charged on over claimed tax, and interest is charged on the remainder. Where any person is liable to interest under paragraph 70 of Schedule 6, we may assess the amount due by way of interest and notify it to him accordingly. Assessed amounts are recoverable as levy due (paragraph 71 (3) of Schedule 6 to the Finance Act 2000).

Time limits on penalty assessments

A debt reported for civil recovery action must be capable of being enforced. There are time limits for the making of assessments. In the event of the death of the person liable to a civil penalty, an assessment may be made up to three years after the death of that person.

Three years rule

Paragraph 108 (1) of Schedule 6 to the Finance Act 2000. An assessment made under paragraph 106 of Schedule 6 to the Act (see above) shall not be made more than three years after the conduct to which the penalty relates.

Twenty years rule

If levy has been lost as a result of evasion, fraud, or failure to notify liability to be registered, an assessment may be made for any civil penalty relating to that conduct not more than twenty years after the conduct to which the penalty relates (paragraph 108 (2) of Schedule 6 of the Finance Act 2000).