Many business are receiving VAT, or Corporation Tax, assessments for incorrect tax returns submitted years earlier. HMRC have 2 years to raise an assessment for VAT errors and 3 years for Corporation Tax, unless the error was deliberate.

Some Officers raise penalties for deliberate behaviour simply because they know they will be out of time if they do not. However, many Officers are simply not aware of the time-limits.

If a deliberate penalty is received for periods out of time, we suggest the deliberate penalty is challenged before the assessment is challenged for being out of time. HMRC Officers are more likely to reduce a penalty from ‘deliberate’ to ‘careless’, if they believe the assessment will stand either way. By dealing with the issues in this order, it may save the need to appeal matters to the Tax Tribunal.