The current time limits for both onshore and offshore tax investigations are usually four years if there has been reasonable care by the taxpayer, six years if the non-compliance is as a result of careless behaviour and 20 years if the behaviour is deliberate.

Under the proposals, for offshore non-compliance, the existing four or six year time limit will be extended to at least 12 years, whatever the behaviour, to give HMRC more time to investigate.

Where there is deliberate behaviour, the time limit for both onshore and offshore cases remains 20 years.

The government plans to implement the new time limits in 2019. The measure will impact from 2021 and builds on changes brought about by the requirement to correct rules, which take effect from April 2018.

Treasury costings suggest this measure, along with the new requirement to correct rules and the worldwide disclosure facility, will result in additional tax receipts of £10m in 2022/23.

Patricia Mock, tax director at Deloitte, said: ‘The proposal is that HMRC will always be able to assess at least 12 years back, even if the behaviour was not deliberate. The 20 year time limit will remain in respect of deliberate behaviour. It is likely that this has been introduced to assist HMRC in assessing tax based on additional information flowing to the UK from countries adopting the common reporting standard.

‘Whilst it is important that HMRC should have appropriate collection powers to collect the right amount of tax, it is equally important that there are proper safeguards in the system. Those with offshore income and gains will need to regularly review their tax affairs, and take care to ensure that the income and gains they report are fully in line with current legislation.’

Report by Pat Sweet