Limitation act or TMA - Time Limits for enforcement

[Novat]

According to the limitation act 1980 there is no time limit for the enforcement of non payment of taxes.

Pre-enforcement: limits in enforcement proceedings: limitation legislation

England and Wales
Debts that are not tax

In England and Wales only, the Limitation Act 1980 provides that recovery action for debts should commence within six years from the debt becoming payable. But Section 37(2) of the Act excludes proceedings for recovery of tax or duty and interest on tax or duty thus there is no time limit for those debts.https://www.gov.uk/hmrc-internal-manual ... dmbm595080

But according to the tax management act (as amended under schedule 39 of the finance act 2008) there are time limits of 4,6 and 20 years depending on the circumstances of the non payment.

To confuse things further, section 39 of the limitation act 1980 appears to suggest that the TMA supersedes the limitation act by saying:

39 Saving for other limitation enactments.

This Act shall not apply to any action or arbitration for which a period of limitation is prescribed by or under any other enactment (whether passed before or after the passing of this Act) or to any action or arbitration to which the Crown is a party and for which, if it were between subjects, a period of limitation would be prescribed by or under any such other enactment.

Is it 4,6 and 20 years as per the TMA or is it indefinite as per the Limitation act?

[maths]

LA 1980 s37:

"(2)Notwithstanding subsection (1) above, this Act shall not apply to—

(a)any proceedings by the Crown for the recovery of any tax or duty or interest on any tax or duty;"

It is TMA 1970 which is in point.

[Novat]

Thanks.

It's confusing as this government manual appears to suggest that because section 37 (2) excludes proceedings for recovery of tax it means that there are no time limits on how far back the government can go?
https://www.gov.uk/hmrc-internal-manual ... dmbm595080

In England and Wales only, the Limitation Act 1980 provides that recovery action for debts should commence within six years from the debt becoming payable. But Section 37(2) of the Act excludes proceedings for recovery of tax or duty and interest on tax or duty thus there is no time limit for those debts.

But you're saying that the TMA 1970 (including it's amendments under schedule 39 the finance act in 2008) takes precedence and supersedes the Limitaion Act?

[maths]

I should have read your posting a little closer.

With respect to the recovery of tax there is no time limit ie the LA 1980 does not apply (s37 as above).

The periods you refer to relate to limits within which HMRC must raise assessments (eg TMA 1970 s34).

[Novat]

Purely a hypothetical scenario, just so I can understand this a little better.

X lays a carpet for his neighbour and gets paid cash in hand for this job. All X's other taxes have been declared properly but he does not declare this single cash payment to HMRC.

Somehow, 21 years later HMRC suddenly find out about this single incident of non payment of tax. Is it too late for them to take any action, given that it is now more than 20 years later?

[bd6759]

Assessments create the tax debt. The maximum time for making an assesment is 20 years. If HMRC cannot make an assessment, there is no debt.

The limitations act is a red herring because even if it did apply to tax, there is no debt until an assessment is made, therefore the LA would not kick in until 6 years after the assessment. But it does not apply. If an assesment was made 30 years ago, the debt could still be enforced (although it might be difficult to prove).

[Novat]

So the carpet fitter in my previous hypothetical example is highly likely to be safe from enforcement after 21 years even​ though it could be classed as fraud?

I know it's a simplistic example but it's hard for laymen like me not to get confused with the jargon.

[bd6759]

HMRC cannot make an assesment to recover tax that was due more than 20 years ago. No jargon involved.

There is no statute of limitations for criminal offences, so technically the carpet fitter could be prosecuted for a crime and have his ill-gotten gains confiscated under the proceeds of crime act.

[Novat]

Thank you.

[maths]

It is not uncommon in significant tax cases for the offence of cheating the public revenue to be invoked by HMRC. In such cases it is not necessary for HMRC to have raised an assessment. For an example where an under declaration of profits of a business had been made to HMRC see Hudson [1956] 2 QB 252.