From 31 March 2008, there is an even greater incentive to make sure corporate tax returns are lodged with HM Revenue and Customs (HMRC) on time.
From that date, returns lodged by the normal due date will only be ‘open’ for an HMRC enquiry (assuming there is no serious tax irregularity) for one year after they are filed, as opposed to the previous system of one year after the due date for filing.
For example, a corporate tax return filed on 1 May 2008 that is due to be filed on 1 July 2008 will only be open for enquiry until 30 April 2009. Previously, such a return would have been open for enquiry until 30 June 2009.
Says <<CONTACT DETAILS>>, “This change is particularly beneficial for businesses which are in the course of negotiation for sale, as an early filing of the relevant return will allow comfort regarding the tax position to be obtained earlier.”
The position for returns filed late is that they remain open for enquiry until the end of the quarter (the quarter dates are 31 January, 30 April, 31 July and 31 October) following the anniversary of the day on which they are filed – i.e. a return due on 1 October 2008 which is filed on 1 November 2008 will be open for enquiry until 31 January 2010.
Similar changes are being made in respect of personal tax returns.
The measures were introduced in the 2007 Finance Act.