Taxation (International and Other Provisions) Act 2010 section 42

Extended time limits for opening enquiries: discovery of errors

Section 42 allows HMRC to open or reopen an enquiry into an interest restriction return beyond the normal time limit where errors are discovered, subject to conditions and extended deadlines that vary depending on whether the non-compliance was deliberate, careless, or innocent.

• HMRC may open a late enquiry or reopen a closed one if they discover that an interest restriction return may not comply with the requirements, provided this could result in additional tax for a company and the officer could not reasonably have been expected to spot the issue based on the information available at the time.
• The "relevant information" against which HMRC's awareness is judged includes the return itself, the two preceding returns, documents provided during any enquiry into those returns, information reasonably inferable from those sources, and anything formally notified in writing to HMRC by the reporting company or its representative.
• The extended time limits are 20 years from the end of the period of account for deliberate non-compliance, 6 years for careless non-compliance, and 4 years in all other cases.
• Non-compliance can be attributed to the reporting company, a person acting on its behalf, or a person who was a partner of the reporting company at the relevant time — all of whom are treated as "qualifying persons" for these purposes.