UT (Tax & Chancery) UT/2023/000103 - [2025] UKUT 00102 (TCC)

The word “it” in the sentence “not later than six years after the end of the accounting period to which it relates” was a reference to application for discharge, and that application “relates” to the assessment and seeks relief from it.

A person in receipt of a scheme sanction charge only becomes aware of that charge when it has been assessed, so if (for example) HMRC issued the assessment three years after the year in which the liability arose, the administrator would have only a further three years to apply for the discharge. That person would thus be deprived of half the statutory time limit, and “as a matter of general policy, time limits should not run when the person to whom they apply has no knowledge that they are running”.

Scheme sanction charge assessments do not inform recipients that they can apply for discharge of the liability under s 268. In contrast, where there is a statutory right of appeal, HMRC inform taxpayers of that right in the decision letter.

There is no equivalent in the Discharge Regs to TMA s 49, which allows HMRC or the Tribunal to allow a taxpayer to make a late appeal. As a result, there is no discretion for HMRC to allow a person to make a discharge application after the end of the time limits set out in Reg 3. This was a further reason why the provisions should be interpreted generously, so as to allow more time, not less time.