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HMRC have issued Brief 16/10, which clarifies the new time-limits for assessments and claims introduced by Finance Act 2009, Sch. 39 with effect from 1 April 2010 in the case of capital gains tax, corporation tax, income tax, PAYE and VAT. The new time limits came into effect on 1 April 2010 for direct taxes. The normal time limits for these taxes have decreased from six years, or five years from the 31 January immediately following the tax year, to four years.

The new time limits came into effect on 1 April 2009 for VAT because the normal time limits for VAT have increased from three to four years. There are transitional provisions for VAT. These provisions prevent out of time periods from coming back in time by disregarding a prescribed accounting period that ended on or before 31 March 2006. This means that by 1 April 2010 the four year time limit for VAT assessments applies in full.