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Where Taxpayers and Advisers Meet

Tax investigation statute of limitations

jjones1969
Posts: 1
Joined: Wed Feb 21, 2018 9:55 pm

Tax investigation statute of limitations

Postby jjones1969 » Wed Feb 21, 2018 10:09 pm

Can someone explain the "HMRC has 12 months to launch tax investigation" rule for me?

As I understand it this rule means that if HMRC is going to launch a tax investigation into any one tax year they need to do it within the 12 months of when you filed your tax return (if the return is on-time).

So if you filed your 2016/17 tax return on 9 June 2017, HMRC would have until 9 June 2018 to investigate it. And once that deadline is past can they investigate it any further IF future tax returns don't give them any proof or evidence that something is wrong with that future return (ie: the next return)?

Or I know there is a rule where HMRC can look into your back taxes 4 or 6 years. But can they select any of the previous returns in that 4 or 6 year period even if the 12-month window for that return has already passed if they find nothing wrong with returns after that year?

Or I guess another way I can try to explain what I am trying to ask:

Say the date is 21 February 2018 and I've followed the previous returns on the dates listed below:

2013/14: tax return filed on 15 May 2014
2014/15: tax return filed on 15 June 2015
2015/16: tax return filed on 10 June 2016
2016/17: tax return filed on 15 May 2017

In the return/date examples listed above could on today's date (21 Feb 2018) HMRC choose to randomly investigate my 2015/16 tax return (filed on 10 June 2016) even though the 12-month investigation window would have ended on 10 June 2017? Or if they wanted to investigate that specific return, now that the 12-month window has closed, would they need to prove something wrong with my 2016/17 return (which the 12-month window is still open on) and then say "now we believe because we found X (X being an incorrect number or other problem) we want to see your information for your 2015/16 return?

Basically, I'm wondering if HMRC can pick and choose which return to check in the last 4 or 6 years or if they need to have proof the most recent return is incorrect before they could look into past returns before the most recent?

bd6759
Posts: 3069
Joined: Sat Feb 01, 2014 3:26 pm

Re: Tax investigation statute of limitations

Postby bd6759 » Thu Feb 22, 2018 12:41 am

Section 9A is the HMRC authority to check a return. It allows then to enquire into any tax return within the prescibed time - normally 12 months from the day it was filed. They do not need to have a reason or a suspicion to check a return. A percentage of checks are carried out randomly.

HMRC cannot randomly check a return outside the time limits. But they can make a discovery that leads them to believe that tax is unpaid. If they have such a belief they can make an assessment to recover any tax that they believe is unpaid. Normally they will write to you to say that they believe your self assessment is wrong and why. They may ask for information to help clarify the position and help them determine the amount of tax that might be due.

It is not the case that you can get away with underpaying tax by crossing your fingers and hoping that your tax return is not selected for enquiry. The discovery provisions are there to ensure that the correct tax is paid.

SteLacca
Posts: 437
Joined: Fri Aug 07, 2015 2:17 pm

Re: Tax investigation statute of limitations

Postby SteLacca » Thu Feb 22, 2018 5:02 pm

To add, if HMRC believe that any understated tax is by deliberate action, they have 20 years. Since the way you have phrased your question suggests that you know there is a deficiency arising from a previous Return, and that you have no intention of notifying them of the deficiency, then you could find yourself caught by this.

bd6759
Posts: 3069
Joined: Sat Feb 01, 2014 3:26 pm

Re: Tax investigation statute of limitations

Postby bd6759 » Thu Feb 22, 2018 5:19 pm

I am not aware of any such provision.

wamstax
Posts: 1861
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Tax investigation statute of limitations

Postby wamstax » Fri Feb 23, 2018 9:01 pm

The only limitation is if they can make an assessment for the year that there is underpaid tax that they can prove

You should also be aware that if it is anything to do with offshore income after 1st October 2018 you can be looking at 23 years back. HMRC have also issued a consultation document on increasing the 6 year time limit to 12 years for offshore or foreign income.

If you know there is a deficiency in one of your tax returns then I would recommend that you get some experienced advice and consider making a voluntary disclosure. After all if you have been innocent or careless in making an incorrect return and after realising it you do nothing then you’re now deliberate.
regards and hope this helps
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wamstax
Posts: 1861
Joined: Wed Aug 06, 2008 3:39 pm
Location: Operate Nationally but based in Aberdeen
Contact:

Re: Tax investigation statute of limitations

Postby wamstax » Fri Feb 23, 2018 9:04 pm

You can always go online and amend your return if it is still in the amend window period but this would extend the period that HMRC could raise an enquiry into the amendment.
regards and hope this helps
http://www.wamstaxltd.com
Operates Nationally with competitive costs
and email and phone contact can be obtained from website

someone
Posts: 360
Joined: Mon Feb 13, 2017 10:09 am

Re: Tax investigation statute of limitations

Postby someone » Fri Feb 23, 2018 11:47 pm

The only limitation is if they can make an assessment for the year that there is underpaid tax that they can prove

You should also be aware that if it is anything to do with offshore income after 1st October 2018 you can be looking at 23 years back. HMRC have also issued a consultation document on increasing the 6 year time limit to 12 years for offshore or foreign income.
So what are HMRCs limits if you didn't do a NRCGT thing, owe no tax, and are still blissfully aware that you should have done one and are racking up penalties?

bd6759
Posts: 3069
Joined: Sat Feb 01, 2014 3:26 pm

Re: Tax investigation statute of limitations

Postby bd6759 » Sat Feb 24, 2018 12:20 pm

If there is no tax to pay, there is nothing to assess.

Penalties for failure to make a return are not the same as an assessment to tax.


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