Commentary

A4.325 Extended time limits—loss of tax brought about carelessly or deliberately

Administration and compliance

A4.325 Extended time limits—loss of tax brought about carelessly or deliberately

A4.325 Extended time limits—loss of tax brought about carelessly or deliberately

From 1 April 2010 the extended time limit for making an assessment to income tax and capital gains tax or corporation tax where the case involves the carelessness of the taxpayer, their agent or a related person is six years after the end of the tax year or accounting period1.

A loss of tax is brought about carelessly by a person if they fail to take reasonable care to avoid bringing about the loss or situation. In particular they are careless where information is provided to HMRC by a person who later discovers that the information is inaccurate but fails to take reasonable steps to inform the tax authorities of the inaccuracy2.

In the Royal Bank of Canada3, the Bank had been considered to be careless by not heeding advice from the BP group to contact HMRC directly to determine their tax liability on royalties received from BP. This advice stemmed from a conversation between BP and HMRC and 'clearly put the Bank on enquiry that there was a potential argument with HMRC about the taxability of the Payments, which then effectively shifted the burden back onto the Bank to demonstrate that it had taken steps

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