HMRC has far-reaching powers when it comes to investigating a taxpayer’s affairs, but HMRC time limits apply, which dictate how far back an investigation can go.

If you have been contacted by HMRC regarding a tax investigation, our specialist HMRC solicitors and barristers are on hand to provide the advice and support you need to navigate the issue successfully and minimise the disruption to your business.  As well as advising you on your legal position, we can attend the investigation alongside you to ensure HMRC’s officers abide by HMRC time limits.

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.

 

What are HMRC Time Limits?

HMRC can investigate any taxpayer’s affairs at will, but it usually does so because it suspects that you owe tax or you operate within an industry identified by HMRC as being high-risk, such as those that deal mainly in cash.

When HMRC decides to investigate your affairs, HMRC time limits apply, which govern how far back the investigation can go. The investigation will usually begin with HMRC looking into last year’s tax return, which it must do within 12 months from when you filed it.

If HMRC decides it wants to look at your historic tax and financial affairs, how far back its officers can go depends on how serious they consider the case to be. As a general rule, the following HMRC time limits apply:

  • 4-year HMRC Time Limit.

The 4-year HMRC time limit is the normal HMRC time limit and applies to all taxes where the taxpayer has taken reasonable care to pay the correct amount of tax but has made an innocent error or omission.

  • 6-year HMRC Time Limit. 

If HMRC suspects that a taxpayer has not paid enough tax because of carelessness, its officers can look at the taxpayer’s affairs for the past 6 years. This 6-year HMRC time limit applies to income tax, corporation tax, capital gains tax, stamp duty land tax, inheritance tax, petroleum revenue tax, and stamp duty reserve tax.

  • 12-year HMRC Time Limit.

The 12-year HMRC time limit applies in cases where tax has been lost in an offshore matter or transfer. The taxes affected are income tax, inheritance tax, and capital gains tax, and the HMRC time limit applies whether the taxpayer has taken reasonable care or acted carelessly.

  • 20-year HMRC Time Limit. 

The 20-year HMRC time limit applies where HMRC suspects deliberate tax evasion on the part of the taxpayer, or the taxpayer has failed to notify HMRC about a taxable income source with no reasonable excuse.

The taxes affected by this 20-year HMRC time limit are:

  • income tax
  • capital gains tax
  • VAT
  • corporation tax
  • landfill tax
  • stamp duty reserve tax
  • inheritance tax
  • insurance premium tax
  • aggregates levy
  • climate change levy, and
  • stamp duty land tax
  • petroleum revenue tax, and
  • excise duties

 

How does HMRC decide which HMRC Time Limit applies?

HMRC decides which HRMC time limit applies based on the circumstances of the individual case. So, if it initially believes a taxpayer’s failure to pay the correct amount of tax was a result of an innocent omission but subsequently discover evidence of carelessness or fraud, they may extend the HMRC time limit.

 

What happens if HMRC discovers unpaid Tax?

If HMRC’s investigations show that you have underpaid tax, it can recover that unpaid tax for the relevant period together with interest. In cases where the 20-year HMRC time limit applies, the amount you are asked to pay can be significant. HMRC also has the power to impose penalties on taxpayers who have underpaid tax through carelessness or on purpose.

 

How can we Help?

 At Altion Law, we specialise in HMRC and Border Force legal matters. Our expert solicitors and barristers have unparalleled experience in these niche fields and offer high-quality legal advice at affordable rates.

HMRC investigations can result in costly penalties, disrupt your commercial operations, and impact your business’s reputation, so handling them effectively is crucial. We have a detailed understanding of HMRC’s many policies and procedures, and are familiar with how its officers operate. As soon as you contact us for support with an HMRC issue, we’ll assess your situation and devise a strategy to deal with the matter as quickly and cost-efficiently as possible.

Our HMRC and Border Force team is well known for its commercial approach. We combine our legal expertise with a deep understanding of business, with many of our solicitors and barristers having spent time working for leading corporations. We understand the challenges faced by businesses of all types and sizes, and we tailor our advice to the individual organisation’s needs and requirements.

 

For a confidential free discussion, call us today on 01908 414990,  alternatively email us at Hello@altion-law.co.uk or complete our Free Enquiry Form and we will call you back.