New time limits and assessments
Following announcements last year of new shorter time limits and related changes, the necessary legislation has now been implemented.This will align the new time limits for assessments and claims across income tax, corporation tax and VAT.
The new four-year time limit for assessments and claims is a reduction from six years for Income Tax, Capital Gains Tax and Corporation Tax and an increase from three years for VAT.
The introduction of the four year time limit is subject to transitional provisions and will not be fully implemented until 1 April 2010. There will be transitional arrangements in place from 1 April 2009.
The transitional provisions will basically ensure that VAT claims and assessments relating to periods on or before 31 March 2006 will be out of time from this April. Any changes relating to later quarters i.e. those ending on or after 30 June 2006 will remain within the new four year time limit and open for inspection until July 2010 (i.e. 4 years after the quarter end).