Introduction: What Form 872 Means for Americans in Britain
Form 872 is the IRS consent that extends the time the agency has to assess extra tax, and it usually arrives in the middle of an examination with a polite covering letter. For an American living in London, however, that letter raises questions the covering note never answers. Should you sign it, limit it, or refuse it? Furthermore, what happens to your foreign tax credits, your open HMRC enquiry and the years you never filed if you do?
At TaxYork, we represent high-net-worth Americans in Britain through IRS examinations every year, and the Form 872 decision is one of the most consequential calls in any audit. In our experience, most clients sign the first version they receive, because refusing feels confrontational. Nevertheless, an unrestricted open-ended consent can keep a return exposed for years. This guide explains the rules, the options and the cross-border traps, with a worked case study using 2026 facts.
Form 872 and the Three-Year Assessment Clock
The IRS normally has three years from the date you file a return to assess additional income tax. An early return counts as filed on its due date, while a late one starts the clock on the day the IRS receives it. Consequently, every open examination runs against a fixed expiry date, which the IRS calls the assessment statute expiration date.
Under section 6501(c)(4) of the Internal Revenue Code, you and the IRS can agree in writing to move that date. Therefore, the consent does not create a new liability. Instead, it simply buys the examiner more time. Crucially, both parties must sign before the original period expires, because a consent signed afterwards cannot revive a closed year.
Why the IRS Asks Americans Abroad to Sign
Expat returns take longer to examine. Examiners must verify UK tax paid, translate British documents into IRS terms and wait for post that crosses the Atlantic twice. As a result, cases involving Americans in Britain regularly approach expiry before the examiner has finished. Our guide to the IRS correspondence audit for Americans in the UK explains why those delays build up from the very first letter.
The Form 872 Family: Fixed, Open-Ended and Restricted Consents
The IRS uses several versions of the consent, and the choice between them matters more than most taxpayers realise. The Internal Revenue Manual on extensions by consent sets out the rules the examiner must follow. Accordingly, you should always check which form you have been sent before you consider signing it.
Form 872: The Fixed-Date Consent
The standard Form 872 extends the assessment period to a specific date written on the form. When that date passes, the year closes unless you sign a further consent first. For most individuals, a fixed-date consent is the safer choice, because you know exactly how long your exposure lasts. Moreover, you can negotiate the date itself, and a shorter extension keeps pressure on the examiner to finish.
Form 872-A: The Open-Ended Special Consent
The open-ended special consent, Form 872-A, contains no end date at all. Instead, it ends 90 days after the IRS receives a Form 872-T termination notice from you, 90 days after the IRS mails its own termination notice, or when a notice of deficiency is issued. As a result, an open-ended consent can keep a year alive indefinitely if nobody acts.
We see clients who signed an open-ended consent years ago, forgot about it, and later discovered the year was still open when a new issue emerged. Therefore, if you have ever signed an open-ended consent, diarise it and consider whether to send Form 872-T. Remember that termination still leaves the IRS 90 days to assess.
Restricted Consents: Limiting the Extension to Named Issues
A restricted consent adds wording that confines the extension to specific issues. For instance, you can limit it to your foreign tax credit computation and one capital gain, so the rest of the return closes on the original date. The IRM allows standard restrictive language and requires counsel review for unusual wording. In practice, a well-drafted restriction is the single most valuable tool a represented taxpayer has during this negotiation.
Your Rights Before You Sign Form 872
Congress added specific protections in 1998, and every request for a Form 872 must come with them. Importantly, those rights exist whether the examiner mentions them or not. Therefore, you should know them before the first conversation about an extension.
The Three Rights Section 6501(c)(4)(B) Guarantees
Section 6501(c)(4)(B) requires the IRS to tell you, every time it asks, that you may refuse to extend the period, limit the extension to particular issues, or limit it to a particular period of time. The IRS normally delivers that notice through Letter 907 and Publication 1035, Extending the Tax Assessment Period. Additionally, the Taxpayer Bill of Rights confirms your right to challenge the IRS position and to be heard.
Joint Returns, Non-US Spouses and Separate Statutes
Each spouse on a joint return has a separate statute of limitations. Consequently, one signature does not extend the period for the other spouse, and the IRS needs both. This matters for Americans who elected to file jointly with a British spouse, because that spouse must also sign any Form 872 for the joint year. Moreover, the IRS should notify each spouse separately wherever practical.
Signing From London: Post, Fax and Representatives
Original signatures arriving by international post can take weeks. The IRM therefore accepts faxed consents where the examiner has spoken to you and recorded that contact. However, taxpayer digital signatures are not automatically accepted, so confirm the method in writing well before the deadline. Furthermore, if you hold a Form 2848 power of attorney, your representative receives the request and can negotiate the terms on your behalf.
Should You Sign, Restrict or Refuse Form 872?
There is no universal answer. However, the decision always turns on three factors: how strong your position is, how much time remains, and what else the open year could expose. Accordingly, we weigh each factor before we advise any client on a Form 872 request.
What Happens If You Refuse
If you refuse, the examiner will normally close the case on the evidence available and issue a statutory notice of deficiency. Under section 6213(a), you then have 90 days to petition the United States Tax Court, or 150 days if the notice is addressed to you outside the United States. That extra 60 days helps London residents, although the petition deadline is absolute.
Refusal is sometimes the right choice. For example, where the examiner has not yet found a real issue and the year is close to expiry, refusing forces a decision on a thin file. Nevertheless, a rushed examiner often proposes the largest possible adjustment, because there is no time to review your evidence properly.
Why Signing Preserves Your Route to IRS Appeals
The IRS Independent Office of Appeals settles most disputed examinations without litigation. However, under IRM 8.21.3, Appeals will not accept a non-docketed case with fewer than 365 days left on the assessment statute. Therefore, if you want an Appeals officer to review the examiner's findings, you will usually need to sign a Form 872 first.
That rule explains why examiners ask so early. A case with 14 months remaining may look safe, yet after the examiner's report and your 30-day response, it may no longer meet the 365-day threshold. As a result, the request often arrives long before the deadline seems urgent.
Negotiating the Date and the Wording
Examiners rarely present the consent as negotiable, yet both the date and the scope usually are. We start by confirming the true expiry date from the IRS account transcript, because a late-filed return or an amended return can shift it. Next, we ask what the examiner still needs and how long each step will take, and we propose a date that covers that work plus the 365 days Appeals requires.
Similarly, we draft the restriction around the issues already identified in writing, such as an information document request or a draft report. That approach gives the examiner no reason to object, because the restriction mirrors the examination as it actually stands. Where the examiner insists on an unrestricted consent, we ask for the reason in writing and escalate to the group manager if the answer is weak. In our experience, a calm, documented request succeeds far more often than a refusal delivered at the last minute.
When an Unrestricted Consent Is the Real Risk
An unrestricted consent lets the examiner raise new issues on the whole return for as long as it remains open. For a wealthy American with UK funds, share schemes and a British pension, that is a meaningful risk. In contrast, a restricted Form 872 keeps the examination focused on the issues already raised. We therefore request a restriction in almost every case and negotiate a fixed date rather than an open-ended one.
The Cross-Border Traps No Standard Guide Covers
Most published guidance on Form 872 assumes a domestic taxpayer with W-2 wages and a US brokerage account. Americans in Britain face a different set of rules. In particular, several provisions can keep a year open without any consent at all, and others interact with HMRC's own timetable.
Section 6501(c)(8): Years That Never Closed
If you failed to file a required international information return, such as Form 8938, Form 5471, Form 3520 or Form 8621, section 6501(c)(8) suspends the assessment period until three years after you file it. Consequently, the IRS may not need your consent at all, and a restricted Form 872 gains you little. Similarly, the six-year period in section 6501(e) applies where you omitted more than $5,000 of income from specified foreign financial assets.
Where no return was filed at all, the period never starts. Therefore, Americans with missed US tax returns or unreported UK accounts should resolve those years before an examination reaches them. Our FBAR and FATCA reporting service and the IRS Streamlined Filing procedure exist for exactly that purpose, but both close once an examination opens.
Accidental Americans and Dual Nationals Under Examination
Accidental Americans and dual national US UK citizens face the sharpest version of this problem. Many filed their first US returns only recently, after a British bank asked for a tax identification number. As a result, their earliest filed years often carry gaps: missing Form 8938 disclosures, UK pensions reported on the wrong basis, or ISAs treated as tax-free when the IRS sees them as ordinary taxable accounts.
When one of those years is examined, the examiner may look back through every schedule. Consequently, an unrestricted consent can turn a narrow query about one credit into a review of missed reporting across the whole return. We therefore check every information return for the year before we respond to any consent request. Where we find a gap, we correct it deliberately, because a correction made before the examiner asks is treated very differently from one prompted by a penalty letter.
FBAR Years Use Form 15616, Not Form 872
FBAR penalties sit under Title 31, not the Internal Revenue Code, and carry a separate six-year limit. The IRS extends that period using Form 15616, as Publication 5970 explains, rather than any version of Form 872. As a result, you may face two separate consent requests during one examination. Our note on the FBAR statute of limitations sets out how those two periods diverge.
Foreign Tax Credits, HMRC Enquiries and the 10-Year Window
Foreign tax credit issues dominate expat examinations. If HMRC changes your UK liability later, section 905(c) treats that as a foreign tax redetermination, and section 6501(c)(5) lets the IRS assess any resulting tax outside the normal period. Meanwhile, you can claim additional credits for up to ten years under the special rule described in IRS Topic 856 on the foreign tax credit.
Therefore, you rarely need an open-ended Form 872 to protect a credit for UK tax that is still under an HMRC enquiry. HMRC generally has 12 months after filing to open an enquiry under section 9A of the Taxes Management Act 1970, but its discovery powers stretch to 12 years for offshore matters under section 36A. Our guide to HMRC discovery assessments explains that British timetable, and our US-UK tax treaty optimisation team aligns both sides.
How Form 872 Affects Refunds, Penalties and Interest
An extension works in both directions. It gives the IRS more time, but it can also help you. Accordingly, you should understand the knock-on effects before you decide.
Section 6511(c): Your Refund Window Moves Too
If you sign a Form 872 within the period for claiming a refund, section 6511(c) keeps your own refund period open until six months after the extended assessment date. Consequently, you can file a protective claim or a Form 1040-X for that year while the examination continues. This is valuable where the examiner's review has uncovered overpaid US tax, such as unclaimed UK credits. Our guide to amending a US expat return covers the mechanics.
Interest Keeps Running While the Clock Is Extended
Signing does not stop interest. The IRS charges interest on any eventual deficiency from the original due date, so a longer examination means a larger bill. Therefore, clients with a probable adjustment often make a deposit to stop interest running while they argue the rest. Additionally, the 20% accuracy-related penalty remains open for the same extended period, although reasonable cause arguments remain available throughout.
Documents to Gather Before You Respond
Your response to a consent request is stronger when your evidence is already in order. For the year under examination, gather your HMRC SA302 tax calculations and tax year overviews, your P60 or P11D forms, and the Self Assessment return itself. Additionally, collect year-end statements for every UK bank, ISA, pension and investment account, together with the exchange rates you used on the US return.
For foreign tax credit issues, the examiner will want proof that UK tax was actually paid, not merely assessed. Therefore, keep your HMRC payment history and any correspondence about an open enquiry or a statutory review. Where UK tax is still contested, note that a contested amount is not creditable until the dispute ends. As a result, the examiner may disallow part of your credit simply because the British side has not finished, which is itself a reason to restrict the consent to that issue.
After the Examination: Reconsideration and Appeals
If the examination ends badly, the extended year still has routes out. You can request Appeals consideration, petition the Tax Court after a notice of deficiency, or later seek audit reconsideration. Our guide to audit reconsideration from Britain explains that last route. Moreover, the Taxpayer Advocate Service can help where delays cause genuine hardship.
A Form 872 Case Study With Real Numbers
The following illustrative case shows how a well-negotiated Form 872 changes the outcome. The client is a US citizen and portfolio manager in London who filed their 2023 Form 1040 on 17 June 2024, the automatic expat due date. Consequently, the assessment statute for that year expires on 17 June 2027.
The Position
In February 2026, the IRS opened a field examination focused on the foreign tax credit and a £410,000 carried interest distribution. By September 2026, the examiner had not finished and issued Letter 907 with an open-ended special consent. The draft report proposed a deficiency of $148,000 plus a $29,600 accuracy-related penalty, largely because £96,000 of UK tax on the carry was still under an HMRC enquiry and therefore not yet creditable.
The Negotiation
Refusing would have produced a notice of deficiency for the full $177,600, with 150 days to petition the Tax Court. Signing the open-ended form, however, would have left the whole return exposed, including an unreported UK fund that the examiner had not yet noticed. Instead, we returned a fixed-date Form 872 extending the period to 31 December 2028, restricted to the foreign tax credit and the carried interest item. At the same time, the client filed the missing Form 8621 and made a $60,000 deposit to stop interest.
The Outcome
With more than 365 days remaining, the case went to Appeals, which settled the carried interest sourcing issue and waived the penalty for reasonable cause. The agreed deficiency fell to $41,000. HMRC then closed its enquiry in 2027, confirming the £96,000 of UK tax. Consequently, the client filed a foreign tax credit claim within the 10-year window, recovering most of the $41,000. The rest of the 2023 return closed on schedule, and the unreported fund was corrected on the client's own terms.
How TaxYork Can Help
TaxYork prepares and defends US tax returns for high-net-worth Americans in Britain. When an examiner asks for a Form 872, we review the file, confirm the true expiry date, check for any section 6501(c)(8) exposure and draft restrictive language before anything is signed. Additionally, we coordinate the US position with any open HMRC enquiry, so that your foreign tax credits survive both processes.
We also handle the work that sits behind an examination, including missed FBAR filings, missed UK tax returns and missed reporting of pensions, ISAs and investment accounts. Our team has represented hundreds of cross-border clients, and we manage every letter, deadline and conversation with the IRS on your behalf.
Conclusion
A Form 872 request is not a formality. It is a negotiation over how long your return stays open and what the IRS may examine while it does. For Americans in Britain, the stakes are higher, because information returns, FBAR periods and HMRC enquiries all run on different clocks.
Ultimately, the best outcome usually comes from a restricted, fixed-date consent that keeps the Appeals route open without exposing the rest of the return. Refusal suits a narrower set of cases, and an open-ended consent rarely suits anyone. Above all, take advice before you sign, because once the original deadline passes you cannot reverse the choice.
Contact Us
If the IRS has asked you to sign Form 872, or you expect an examination of a year with UK income, please book a consultation with our US-UK team before you respond. You can also contact us at hello@taxyork.com or on 020 3488 8606.
Disclaimer
This article provides general information about US and UK tax procedure and does not constitute tax, legal or financial advice. The rules on assessment periods, consents and appeals are complex, and the right decision depends on your individual circumstances, so you should obtain professional advice before signing or refusing any IRS consent. The case study is illustrative, and its figures are simplified. For authoritative guidance, consult the Internal Revenue Service and HMRC, or speak to the TaxYork team.