Tax Investigation How Far Back Do HMRC Go

A popular myth that we hear on a regular basis, during the course of a tax investigation is that HMRC can only recover back taxes over a six year period.

How Far Back will HMRC Go during a tax investigation

Tax investigation means six years only I hear you say.

The six years rule has become part of tax parlance. But this approach does not always apply during an HMRC tax investigation. So just how far back can HMRC go?

HMRC have an important piece of legislation at their disposal if they identify that tax has been underpaid.

These are known internally as the discovery provisions and they are outlined at Section 29 TMA1970.

Here we look at discovery in greater detail, explore its legal meaning and importantly its implications.

Section 29 TMA1970

Whate does the legislation actually say? After this dictates ability to look at earlier years. It determines the entire scope an extent of their tax investigation powers.

HMRC tell us that “sometimes it may be necessary to make an assessment after a self assessmnet has been made”.

This could be where, the self assessment has already been enquired into and the enquiry has been closed or usually where the time limit for enquiring into a self assessment has expired.

In such circumstances action will be taken by HMRC using Section 29 TMA 1970

To break the language down and look at things simply, HMRC are telling us that they can take civil action to recover unpaid taxes if they “find something out”. Hence we have the term discovery assessment.

The discovery provisions provide HMRC with the facility to recover unpaid taxes for up to 20 years. The popular misconception is that they are restricted to six years simply because that is the rule most often applied.

We have already looked at several key issues which arise during a tax investigation. You can read our useful tax investigation guides by clicking on the relevant link below:

Tax Investigation Settlements

Tax Investigation – Interest and Penalties

Tax Investigation – Certificate of Full Disclosure

Tax Investigation Advice

A tax investigation letter from HMRC can be a terrible worry, particular if taxes has been underpaid in earlier years.

If you need any advice regarding HMRC tax investigation powers or you are concerned that a discovery may have been made the please call us on 0330 999 5000.

We are happy to give you free tax investigation advice and answer any questions that you have regarding our range of tax investigation services.

You need to feel sure that HMRC are operating within the boundaries of their own tax legislation.

Mistakes can be costly. We reduce the possibility of an HMRC error going unchecked. Moreover we will provide the buffer that you need, enabling you to carry on with business and family life.

If you prefer, you can email us by clicking on this link. We will respond to your tax investigation enquiry within the hour.

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