Taxes Management Act 1970

37 Neglect: income tax and capital gains tax. [1960 s.51; 1965 Sch.X 1(1).] U.K.

(1) Where, for the purpose of making good to the Crown a loss of tax wholly or partly attributable to the fraud, wilful default or neglect of any person, an assessment for any year (in this section referred to as “the normal year”) has been made on him not later than six years after the end of that year F1 , assessments to tax for earlier years may, to the extent provided by the following provisions of this section, be made on him notwithstanding that, but for this section, they would be out of time F2 .

(2) No assessment under this section shall be made on any person except for the purpose of making good to the Crown a loss of tax attributable to his neglect.

(3) An assessment under this section for any year ending not earlier than six years before the end of the normal year may, subject to section 41 below, be made at any time not later than the end of the year of assessment following that in which the tax covered by the assessment mentioned in subsection (1) of this section is finally determined.

(4) An assessment under this section for any year ending earlier than six years before the end of the normal year may only be made with the leave of the General or Special Commissioners, given under the following provisions of this section.

(5) Where an assessment for any year (in this section referred to as “the earlier year”) has been made on any person more than six years after the end of that year—

(a) under this section, or

(b) (in the circumstances mentioned in subsection (6) below) under section 36 above,

and it appears to the General or Special Commissioners, on an application made to them not later than the end of the year of assessment following that in which the tax covered by the assessment for the earlier year is finally determined, that there are reasonable grounds for believing that tax for a year ending not earlier than six years before the end of the earlier year was or may have been lost to the Crown owing to the neglect of that person, they may give leave for the making on him of an assessment under this section for that year.

(6) The circumstances referred to in subsection (5)(b) above are that the assessment for the earlier year was one of a number of assessments made on that person for the purpose mentioned in subsection (1) above and that of the years for which those assessments were made—

(a) the latest, apart from the normal year, ended not more than six years before the end of the normal year,

(b) the next, if any, ended not more than six years before the end of the said latest year,

and so on for any earlier years.

(7) An application for leave under this section may be made by the inspector or the Board, and on any such application the person to be assessed shall be entitled to appear and be heard.

(8) In determining the amount of the tax to be charged for any year in any assessment made under this section effect shall be given, if the person to be assessed so requires, to any relief or allowance to which he would have been entitled for that year on a claim or application made within the time allowed by the Taxes Acts.

M1 (9) In this section and section 38 below “tax” does not include corporation tax, and this section shall apply separately to income tax and to capital gains tax, so that the making of an assessment to one of those taxes shall not affect the time allowed for the making of an assessment to the other tax.

F3 (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F4

Textual Amendments

F1 SeeS.I. 1974 No. 896 regn. 4(2) (in Part IIIVol.5)and S.I. 1989 No. 421, Schedule,for modification in relation to Lloyd's Underwriters.

F2 See—Finance (No. 2) Act 1987 s.84(7)—nothing in ss. 34to 40applies to assessments made under Finance (no. 2) Act 1987 s. 84.Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) Sch. 16—application of s. 37to assessments to income tax on company payments which are not distributions.S.I. 1987 No. 530 (in Part III Vol. 5) regn. 11(2)—application of ss. 36and 37to assessments in relation to non-resident entertainers and sportsmen.S.I. 1990 No. 627, regn. 3(2)and Schedule (in Part III Vol. 5)—modification for underwriters for 1987-88.

F3 Repealed by Finance Act 1989 ss. 149(2), 187and Sch. 17 Part VIIIbut not to affect the making of assessments before 1983-84or for accounting periods ending before 1April 1983.And see—Finance Act 1988 (c. 39, SIF 63:1,2) s. 35and Sch. 3—married couples—para. 29re time limits for assessments.Finance Act 1988 (c. 39, SIF 63:1,2) Sch. 5 para. 9—underwriter's agent.

F4 A development land tax provision added byDevelopment Land Tax Act 1976 (c. 24) Sch.8 para.7. Development Land Tax Act 1976repealed byFinance Act 1985 s.98(6)andSch.27 Part X.

Modifications etc. (not altering text)

C1 S. 37(1) applied (with modifications)(19.4.1991) for the year of assessment 1988-1989 by S.I. 1991/851, regs. 1, 3(2), Sch. 1

Marginal Citations

M1 1969

Sch.XX 19(4).