DST61500 - Jeopardy Amendments

A jeopardy amendment to the group’s self-assessment may be made during the course of a compliance check if it is believed that:

  • the self-assessment understates the group’s true tax liability
  • there is likely to be a loss of tax to the Crown unless the assessment is amended at once.

The self-assessment is amended for all purposes when written notice to that effect is given to the Responsible Member of a group.

This is not a routine procedure. The guidance in the Enquiry Manual at EM1951 to EM1955 should be read before making a jeopardy amendment.

HMRC should only make a jeopardy amendment where there is a real risk of the loss of substantial amounts of tax. For example, where omissions of digital services revenues may have been established but the group has refused to make payment and HMRC has information suggesting that liable companies are about to go into liquidation or remove assets abroad.

Where the Responsible Member of a group has appealed against a jeopardy amendment, the appeal and any related postponement application will still be open legally when HMRC issues the closure notice with revenue amendment, as legislation prohibits determination or hearing of the appeal before that date.

The appeal against the jeopardy amendment can be determined by agreement, by the Responsible Member of a group withdrawing the appeal or by the Tribunal.

Alternatively, or in addition, once the group has sent an appeal to HMRC, the Responsible Member of a group may either have a review - whether by accepting the HMRC offer or by requesting a review - or notify the appeal to the Tribunal.

For general information on appeals see the guidance pages under DST68000 Appeals.

It is advisable to ask the Responsible Member of a group during the negotiations leading up to the issue of the closure notice to give HMRC written agreement that the appeal against the jeopardy amendment can be withdrawn or settled by agreement under Para 44 Sch 8 of the Finance Act 2020 - when the revenue amendment is recorded.

HMRC will not release any tax postponed for recovery as a result of an appeal against the jeopardy amendment until the appeal has been formally determined.

Closure notice

HMRC does not conclude a compliance check into a group’s DST return by issuing a jeopardy amendment, even if the figures subsequently stated in the closure notice are identical to those in the jeopardy amendment. To complete the compliance check, HMRC must issue a closure notice.

Whether or not the jeopardy amendment is under appeal, the closure notice should follow the standard format.

HMRC does not need to make any special reference to the jeopardy amendment as the closure notice states the amount of tax which should be included in the return.

Jeopardy amendment under appeal - revenue amendment not appealed

If the group, through its Responsible Member, does not appeal within 30 days of the date of the closure notice, HMRC still has to dispose of the appeal against the jeopardy amendment.

If the group, through its Responsible Member agrees to withdraw the appeal against the jeopardy amendment, it can be treated as determined by agreement under Para 44 Sch 8 of Finance Act 2020.

If the group, through its Responsible Member, does not agree and refers the appeal to the Tribunal, then the general guidance in the ARTG manual should be consulted.

HMRC will not release any tax postponed for recovery as a result of an appeal against the jeopardy amendment until the appeal has been formally determined.

Jeopardy amendment under appeal - revenue amendment appealed

If a group, through its Responsible Member appeals a closure notice, HMRC has to dispose of the appeals against the jeopardy amendment and the closure notice. If agreement cannot be reached, the decision maker should follow the advice in the ARTG Manual.

HMRC will not release any tax postponed for recovery as a result of an appeal against the jeopardy amendment until the appeal has been formally determined.

If the group, through its Responsible Member, refers the appeal to the Tribunal, the officer (or review team) should ask the Tribunal to:

  • first, determine the appeal against the closure notice,
  • then, determine the appeal against the jeopardy amendment in the same figures.

If necessary, the officer (or review team) may need to explain that this is essentially an administrative procedure to dispose of the appeal against the jeopardy amendment and to give the group finality for the return period.