Are protective assessments a back door to discovery? by Salman Anwar

Salman Anwar explains the key considerations for tax advisors dealing with a protective assessment.

The end of the tax year sees a flurry of activity by advisers to ensure their clients have maximised the use of reliefs and allowances to ensure they mitigate the client’s tax liabilities.

But it is also an important time for HMRC as the deadline governs its ability to raise assessments for personal tax liabilities.

For companies that ability is governed by reference to the accounting period end.

In long-running investigations, or those in which HMRC suspects a loss of tax arises in a number of years, HMRC’s ability to assess the tax liability can ‘fall out of time’. Therefore, where HMRC has not definitively established all the facts but has strong suspicions of omissions it may issue what it commonly refers to as a ‘protective assessment’.

In this article I look at what a protective assessment is, the conditions for HMRC issuing one, and key considerations that advisers need to bear in mind.

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