Something is very wrong at HMRC ( a blog by a QC)
Assume you are a taxpayer who has been underpaying tax for years. The law allows HMRC to collect some of that tax. But it also imposes limits on how far into the past HMRC can go. Underpayments further into the past than the law permits cannot be collected: the taxpayer will get away with having underpaid tax.
What are those time limits? Well, ignoring instances where the taxpayer has been dishonest, they are, in the case of VAT, a maximum of four years – but they may be as few as two.
The formal mechanic by which HMRC collects underpaid tax is an ‘assessment’. And because of the time limits, when HMRC discovers a potential underpayment by a taxpayer going back into the past, its practice is to raise an assessment to protect its position. That way, if the potential underpayment does turn out to be anactual underpayment the…
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discordion {Artist Ian Pritchard} 