Whether the Inspector decides to go back into earlier yeras will depend upon quite a number of factors.
1 I assume that because this is concerning you you have an issue regarding earliers years - ie this wasn't a one off omission eg a Capital gain.
2 It can depend on the tax lost of the year under enquiry and whether going back will be cost effective.
3 HMRC Inspectors have targets of both numbers of cases and yield - there may be yield in your case but another case may have more yield and the Inspector my decide to take up the other case rather than go into earlier years on yours.
4 There have been a large number of early retirements at Inspector level in HMRC over the last few months - I being one. When a person retires another has to take over the work or part of it - as a result pressure of other cases may result in yours being closed down prematurely.
5 The bottom line is that if you are "nearing settlement" then you should have been told before now that HMRC would be going back into earlier years. If they spring this on you at the 11th hour you then have cause for complaint.
6 Finally you ask whether this will result in automatic investigations for later years - not automatic - HMRC have ever more sophisticated methods of selecting cases and something may crop up in a later that requires a question- or if your Gross Profit was low and ommissions have been identified HMRC will expect to see better GPR in the future. If the following years return is already in and the Inspector has found fault with the current year he may expect you to voluntarily consider amending the later return.
Bob Jones
Internet Taxation Ltd
bob@internet-taxation.co.uk