113. Time limits

Summary

This section prescribes the time limits within which proceedings may be taken for the recovery of penalties for offences in connection with VAT, and also the time limits within which estimates of tax may be made.

In general, proceedings may be instituted within 6 years, and estimates made within 4 years, of the taxable period to which they relate - but there is no time limit on the institution of proceedings for penalties for fraud or negligence on the part of the taxpayer.

Details

(1) An estimate or assessment of tax may be made within 4 years of the taxable period to which it relates. If the estimate or assessment applies to more than one taxable period, it must be made within 4 years of the earliest period.

(2) If the estimate or assessment relates to an underpayment of tax due to fraud or neglect on the part of the taxpayer, there is no time limit.

“neglect” is defined for the purpose of the provision. Note that a taxpayer will not be deemed to have failed to do anything required by the law/ regulations within a specified time, if he or she meets any extension of the time period allowed by Revenue. Also, if a taxpayer had a reasonable excuse (such as grave illness) for failing to carry out an obligation, no fault is incurred if the necessary action is performed within a reasonable time after the excuse has ceased to apply

(3) Provisions in relation to the making of estimates or assessments of tax due by a deceased person are also contained in the section. Broadly speaking, the estimate or assessment must not be made more than 3 years after the year of death:

• Where probate, etc. is granted in the year of death, the estimate/assessment must be made within the next 3 years;
• Where probate, etc. is granted in other cases (viz. later than the year of death), the estimate/assessment must be made within the next 2 years.

However, where the personal representative delivers an additional affidavit after the year of death, or was liable to deliver such an affidavit in the year of death, the estimate/assessment may be made within the next 2 years after it is delivered. (It is still possible that corrective affidavits for the purposes of estate duty may be lodged; these are also covered by the provision.)

(4) A general 6-year limit is laid down for proceedings in relation to recovery of penalties.

Relevant Date: Finance Act 2020