Taxes Management Act 1970 Schedule 1B paragraph 6

Backward spreading of certain payments

Schedule 1B paragraph 6 deals with the backward spreading of certain payments across earlier tax years, allowing assessments and claims to be adjusted for periods that would otherwise be closed.

• When a payment is received that tax law requires to be spread back over earlier tax years, HMRC may make assessments for those earlier years even if the normal time limits have expired.
• The taxpayer may also make claims for relief in respect of those earlier years to which the payment is spread back, again despite normal time limits.
• Any assessment or claim arising from backward spreading must be made within the time limit that applies to the year in which the payment was actually received, not the earlier years to which it is allocated.
• The provisions ensure that both HMRC and the taxpayer can reopen earlier years solely for the purpose of dealing with the tax consequences of the spread-back amount.

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