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HMRC internal manual

Excise Assessments Interim Guidance

Time limits for section 12(1) and 12(1A) FA1994 assessments to excise duty: four year rule

This rule means you will be in time to assess if the liability to duty arose no more than four years before the day on which you make your assessment. This is provided the assessment is made and notified within one year of evidence of facts.

Because the normal time limit for making assessments for excise purposes increases from 3 years to 4 years, transitional provisions are required to ensure that tax (or tax periods), that were out of time for assessing under the 3 year time limit cannot be assessed under the 4 year time limit.

The normal 4-year time limit, for making assessments for excise purposes applies from 1 April 2011 regardless of the date that the liability to duty arose or the relevant accounting period, if any, involved.

Transitional provisions

In the transitional period from 1 April 2011 to 31 March 2012 the 3 year time limit was gradually extended so that assessments going back 4 years could not be made for the liability to duty occurring before 1 April 2008. This ensures that something that was out of time for an assessment at midnight on 31 March 2011, under the 3 year limit, cannot become in time again on 1 April 2011 under the new 4 year limit.

So although the 4-year time limit applies from 1 April 2011, you cannot make assessments under this time limit for prescribed accounting periods ending on or before 1 April 2008. Nor can you make an assessment that relates to acquisitions, importations or events giving rise to a penalty, that occur on or before 31 March 2006.

Other than in the circumstances set out at EAIG10400 (the twenty year rule), four years is the maximum time limit available to HMRC for assessments under Finance Act 1994 section 12 and in cases where no time limit is prescribed.

The four-year clock does not stop running between the time you have identified a potential liability and when you have sufficient information to make the assessment. So, it is important to remember that earlier dates may be vulnerable to ‘falling off the edge’ during enquiry time.

The four year rule and “bulk” assessments

A “bulk” (or global) assessment is one that covers more than one accounting period but has been assessed as a single period. When making and notifying this type of assessment, you should take particular care to ensure that the four-year time limit is not exceeded. This is because the whole assessment will be out of time if only part of it, for example, the earliest accounting period, would be out of time under the above criteria.

Make a final check at the time the assessment is notified to ensure that the start date for the assessment is not more than four years old.