How Far Back Can HMRC Go?
Understanding HMRC Time Limits for Tax Assessments
Over the past three weeks, we have seen a noticeable increase in new clients contacting us after receiving letters from HMRC for failure to file tax returns . Almost without exception, their first question is the same:
“How far back can HMRC go?”
It’s a fair question — and an important one. Unfortunately, the answer is often misunderstood.
In this article, we explain the legal time limits HMRC must follow , based strictly on the Taxes Management Act 1970 (TMA 1970) .
The starting point: the standard rule
The default position under UK tax law is set out in section 34 of the Taxes Management Act 1970 and Section 37 of the Limitation Act (1980)
Section 9 and 24 of the act state that recovering unpaid National insurance contributions (NIC) can only be done for 6 years.
In straightforward cases, where there is no allegation of careless or deliberate behaviour , HMRC has:
Four years after the end of the relevant tax year to raise an assessment to recover unpaid Income Tax or Capital Gains Tax.
This four‑year rule is often referred to as the “ordinary time limit” , and it applies where:
- Returns were filed
- Information was properly disclosed
- Any error was innocent or due to a genuine difference of interpretation
For many taxpayers, this is the limit that applies.
When HMRC can go back further
The situation changes where HMRC considers that a loss of tax has been caused by the taxpayer’s behaviour . These extended time limits are set out in section 36 TMA 1970 .
Careless behaviour – up to 6 years
Where HMRC can show that the loss of tax was brought about carelessly , it may assess tax up to six years after the end of the tax year.
“Careless” has a specific meaning in tax law. It does not mean deliberate wrongdoing, but rather a failure to take reasonable care — for example:
- Inadequate record‑keeping
- Failing to check figures properly
- Relying on assumptions without professional advice
Importantly, HMRC must be able to demonstrate a link between the carelessness and the loss of tax.
Although there is no time limit for debt recovery, HMRC can’t randomly investigate through decades worth of tax returns for any company on a whim. They need to have a genuine reason for investigating, and they must begin an enquiry no more than 12 months after the date a tax return was filed. Once the enquiry begins, they can dig deeper into your files indefinitely.
HMRC’s investigations can only go back a certain amount of time based on how serious the situation is, as outlined in the table below:
- Genuine mistakes - investigate back 4 years.
- Carelessness - investigate back 6 years.
- Offshore matters/offshore transfers - investigate back 12 years.
- Deliberate tax evasion - investigate back 20 years.
As the investigation progresses, HMRC can reclassify the case severity if new evidence comes to light that you were taking deliberate measures to avoid tax. This means they can go further back to search for more unpaid tax.
Deliberate behaviour or failure to notify – up to 20 years
The longest time limit applies in the most serious cases.
If HMRC believes the loss of tax was:
- Deliberate , or
- Due to a failure to notify chargeability (for example, not informing HMRC that tax was due when no return was filed),
then an assessment can be made up to 20 years after the end of the relevant tax year.
This is a high threshold. HMRC must establish that the behaviour was deliberate or that a statutory obligation to notify was not met.
Why this matters if you’ve received a letter from HMRC
Many of the recent HMRC letters we have seen involve failure to file .
In those cases, HMRC will often initially assume a failure to notify, which can potentially open up the longer time limits.
However, assumptions are not conclusions .
Each case turns on:
- The facts
- The taxpayer’s behaviour
- What HMRC can actually prove
Time limits are frequently misunderstood by taxpayers — and sometimes applied too broadly by HMRC in early correspondence.
A final word - Do Not Panic
If you have received a letter from HMRC and are worried about how far back an assessment might go, do not panic and do not assume the worst‑case scenario applies .
The law provides clear boundaries — but applying them correctly requires careful analysis.
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