The main rule is that when imposing assessments, the inspector only has to consult the taxpayer's file. If it later emerges, for example from other files, that an assessment was too low, the tax can be reclaimed. In that case, the inspector has not committed an official omission; however, a new fact, required for post-clearance recovery, does exist.
Special circumstances
On 27 October 2023, the Supreme Court nuanced this by ruling that under special circumstances, the inspector is obliged to include matters that come up in a file in the files of other taxpayers. If he fails to do so and an understatement of tax is imposed, this constitutes an official omission, and the tax cannot be recovered.
The case in which the Supreme Court ruled concerns a situation in which mother transferred agricultural land subject to a lease to her children. This led to an extensive discussion with the Inland Revenue in the context of the settlement of mother's income tax assessments. In the meantime, the children's assessments were settled without taking into account the outcome of mother's discussion. When the inspector discovered this, he imposed an additional assessment on the children.
The Supreme Court rules that there are such special circumstances here that the inspector should have included the outcome of the discussion in the context of the assessment with mother in the children's files. His failure to do so constitutes an official omission, preventing the tax from being recovered from the children.
No special circumstances
Just under a week later, the Supreme Court ruled in another case That there are no (sufficient) special circumstances. This case concerns a daughter who is heir to her mother's estate. Mother's estate includes the share in grandmother's estate, which had not yet been settled before the levy of inheritance tax.
The daughter did not include grandma's inheritance share in her mother's inheritance tax return. When the inspector found this out, he reclaimed the inheritance tax. The Supreme Court reiterated that the main rule is that the inspector, when settling the inheritance tax assessment for the daughter, only had to consult the mother's (inheritance tax) file and not grandma's as well. This is no different for inheritance tax than for income tax. However, according to the Supreme Court, the circumstances in this case are not so special that the inspector had to add the information from grandma's file to mother's file. The additional assessment imposed was upheld by the Supreme Court.
Bad faith
We note that in the cases described above, the Tax Administration did not allege bad faith. Indeed, if the Tax Office can substantiate that the children failed to include the income/heir share in their tax returns in bad faith, the tax can be reclaimed even if there was an official omission on the part of the inspector.