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Worldwide Disclosure Facility

How many years does worldwide disclosure facility cover ?

A client needs to make a disclosure for US pension income . He is retired and a UK resident but has never regsitered for Self Assessment as he believed all his tax was collected at source. Is there any scope for him to claim that he was careless in ommiting to declare the US income (on the basis he believed this had been taxed in the US before receipt) and therby restrict the disclosure to the last 6 years or, because he has never registered to complete a tax return, will the disclosure extend to the last 20 years ? 



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07th Dec 2017 17:22

I do not pretend to be a specialist in this field but TMA 1970 Section 36(1A)(b) notes that an assessment may be made at any time within 20 years of the year of assessment to which it relates in any case where there is a failure to notify chargeability under Section 7. There is no requirement in the Section that the behaviour leading to the failure should have been either careless or deliberate. Conversely the table at CH56100 notes that if there was a reasonable excuse for not notifying chargeability, and the matter is remedied without unreasonable delay when the failure comes to light, there will be no failure and the time limit for assessment is 4 years.
You need to examine therefore by reference to the facts, and to case law, whether a case can be made for saying that there was a "reasonable excuse" for the failure to notify chargeability so as to limit the calculation of the lost tax to 4 years rather than 20.

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By Windy
to michaelblake
14th Dec 2017 11:53

Many thanks for your detailed response which is very helpful.I will review CH56100 as you suggest !

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to michaelblake
14th Dec 2017 12:31

But that is subject to the loss of tax being bought about carelessly under s36(1) TMA 1970, so if a professional tax advising agent has said no tax return is needed, it is likely to be 4 years since the burden of proof is on HMRC to show a careless loss of tax and recent cases shows that's not easy where their is reliance on a decent agent.

This point seems implicitly confirmed in the following from the link below:

85. No start date or starting circumstances for assessing whether a "discovery" had been made was identified and the case was argued on the basis that the relevant time limit for making a discovery assessment when no return had been filed was the 4 year period set by s. 34 TMA.

The judge seemed to accept this (without wanting to prejudge the FTT) in para 181 as follows:

181…..(xii) the discovery assessments were issued within the 4 year time limit set by s. 34 of the TMA and although they dispute the validity of those assessment (the discovery dispute) the Claimants do not rely on any earlier time period or event giving them finality.

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