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HMRC internal manual

Enquiry Manual

Working the enquiry: jeopardy amendments: when to make

The legislation is silent about the circumstances in which a jeopardy amendment might be appropriate.

However, before you can issue a jeopardy amendment, you are obliged by the legislation 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.

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

  • an individual taxpayer, a partner, or a company intends to dispose of significant 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.

Under these circumstances making a jeopardy amendment will enable DMB to take the appropriate action if the tax you bring into charge is not paid, or the taxpayer is then made bankrupt, or a company goes into liquidation.

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 where bankruptcy or company liquidation is suspected, you should contact DMB for guidance.

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. 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

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

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.

There may also be other case specific circumstances when it is appropriate to issue a jeopardy amendment. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)