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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Working the enquiry: jeopardy amendments: when to make

The legislation is silent about the circumstances in which a jeopardy amendment might be appropriate, but you should normally consider making one only in a full enquiry or in a substantial aspect enquiry.

In particular, you should consider making an amendment where you discover or suspect that

  • an individual taxpayer, a partner, or a company intends to dispose of assets
  • an individual taxpayer, a partner, or a company intends to become non-resident
  • an individual taxpayer or a partner intends to apply for bankruptcy, or a company intends to go into liquidation - but see the next paragraph
  • an individual taxpayer or a partner may be about to go to prison.

There may also be some circumstances affecting a sole director of a close company that mean that it is appropriate to issue a jeopardy amendment to the company, for example if the director is about to go to prison.

Do not however issue a jeopardy amendment once a company has gone into liquidation or an individual has been made bankrupt. If you are uncertain how to proceed you should contact DMB for guidance.

EM8515 explains what you should consider if you intend to issue a jeopardy amendments to a close company and/or its directors. You should also consider including the following in jeopardy amendments where this is relevant:

  • liability in respect of loans or advances, see EM8620+
  • tax due under ICTA88/S747 (profits of Controlled Foreign Companies)

Before you can issue a jeopardy amendment you are obliged by statute to be of the opinion that if you do not act there will be some loss of tax. The phrase `loss of tax’ does not just mean circumstances where tax might not be paid at all. It can include situations where the payment of tax has been delayed for an unreasonable time owing to the default of the taxpayer.

You should also consider making a jeopardy amendment where the taxpayer refuses to co-operate but only if you have already established with some degree of certainty that the self assessment is deficient. This is not to try to force a taxpayer to co-operate but to protect HMRC because you have reason to believe there is a risk of tax being lost.

Where any disputes arise, or you reach an impasse, you should consider whether Alternative Dispute Resolution (ADR) may help you and the taxpayer resolve these. See the ADR web pages for guidance about ADR. ADR is not however suitable for cases where the taxpayer has refused to co-operate or has withdrawn co-operation.

You should have enough information to decide whether or not to accept a postponement application, see EM1955. Little is achieved by making a jeopardy amendment and then accepting an application for postponement of the full amount of the tax.