How far back can HMRC investigate tax returns?

HMRC can investigate 4 years back where reasonable care was taken, 6 years where behaviour was careless and 20 years where the loss of tax was brought about deliberately (section 36(1A) Taxes Management Act 1970). For offshore matters, an extended 12-year limit applies for careless or deliberate behaviour regardless of the standard time limits.

What does HMRC consider to be deliberate behaviour?

The Supreme Court confirmed in HMRC v Tooth [2021] UKSC 17 that a deliberate inaccuracy requires the taxpayer to have known their return was wrong. An error arising from a mistaken belief or reliance on professional advice is not deliberate even if the taxpayer knew HMRC might disagree. In Outram v HMRC [2026] UKFTT 248 (TC), the First-tier Tribunal allowed appeals on precisely this basis: the taxpayers' conduct in an avoidance scheme was held not to be deliberate because they genuinely relied on their advisers.

Can HMRC go back 20 years for any tax?

The 20-year limit applies where the loss of tax resulted from a deliberate inaccuracy in a document submitted by the taxpayer (s.36(1A) TMA 1970). It applies across income tax, capital gains tax, inheritance tax and most other direct taxes. HMRC must prove the conduct was deliberate on the balance of probabilities – they cannot simply assert it. The burden is on HMRC to establish deliberate behaviour, not on the taxpayer to disprove it.

What is a discovery assessment and when can HMRC use one?

A discovery assessment under section 29 TMA 1970 allows HMRC to raise additional tax assessments even after the normal enquiry window has closed, provided an officer discovers that an assessment is insufficient. The discovery must be a genuine new realisation – HMRC cannot raise a discovery assessment based on information already in their possession. Under the staleness doctrine developed in case law, if HMRC sat on information for too long without acting, the assessment may be challenged as invalid.

How do I challenge HMRC asserting the 20-year window?

If HMRC invokes the 20-year window, you can challenge: (1) whether your conduct was truly deliberate under the Tooth test; (2) whether HMRC has properly established deliberate inaccuracy on the civil standard (balance of probabilities); and (3) whether the discovery assessment itself is valid, including whether it is 'stale' because HMRC already held the relevant information. Specialist representation is essential – the distinction between deliberate and careless conduct can reduce liability from 100% penalties and a 20-year window to a 6-year window and much lower penalties.

How Far Back Can HMRC Investigate? The 4, 6 and 20-Year Rules

One of the most common questions we receive is: how far back can HMRC go? The answer depends entirely on your conduct – whether HMRC considers your behaviour to have been reasonable, careless or deliberate. Get this wrong and you could be facing an investigation stretching back two decades.

The Three Time Limits: An Overview

HMRC’s powers to raise additional tax assessments are governed by the Taxes Management Act 1970 (TMA 1970). The legislation creates three distinct time limits that reflect the severity of the underlying behaviour:

Behaviour	Time Limit	Legal Basis
Reasonable care taken	4 years	s.34 TMA 1970
Careless behaviour	6 years	s.36(1) TMA 1970
Deliberate behaviour	20 years	s.36(1A) TMA 1970

These limits apply to income tax, capital gains tax, inheritance tax and most other direct taxes. VAT has its own rules under the Value Added Tax Act 1994, though the underlying principles are broadly similar.

The 4-Year Limit: Reasonable Care

If HMRC believes you took reasonable care in completing your tax return but nevertheless made an error, they can only issue an assessment covering the past four years. This is the standard time limit that applies to the vast majority of taxpayers who make inadvertent mistakes.

What does “reasonable care” mean in practice? HMRC expects you to:

Keep adequate records to support the entries on your return
Take care when completing your return, including checking figures before submission
Seek professional advice where your tax affairs are complex or uncertain
Correct errors as soon as they come to your attention

If HMRC accepts that you acted with reasonable care, their ability to go back further is blocked by the four-year cap. This makes it well worth demonstrating a systematic approach to record-keeping and return preparation.

The 6-Year Limit: Careless Behaviour

Where HMRC concludes that an underpayment of tax resulted from careless behaviour – that is, a failure to take reasonable care – the time limit extends to six years from the end of the relevant tax year.

Carelessness is a lower threshold than deliberate conduct, but it is still meaningful. HMRC will typically argue carelessness where:

Records were inadequate or missing
Figures on the return were not checked or reconciled against source documents
Professional advice was not sought in circumstances where it clearly should have been
Known errors were not corrected within a reasonable time

Penalties for careless behaviour typically range from 0% to 30% of the unpaid tax, reduced for disclosure and cooperation. However, the extended time limit means HMRC can recover far more in additional tax than would be possible within the four-year standard window.

The 20-Year Limit: Deliberate Behaviour

The most serious category is deliberate behaviour. Under section 36(1A) TMA 1970, HMRC can raise assessments going back up to 20 years where the loss of tax resulted from a deliberate inaccuracy in a document submitted by the taxpayer. This is the provision that enables HMRC to investigate conduct stretching back to the early 2000s.

The consequences of being found to have acted deliberately are severe:

Penalties of between 20% and 100% of the unpaid tax (or higher for offshore matters)
Potential publication of your name as a deliberate tax defaulter
Increased risk of criminal investigation and prosecution
Interest on all unpaid tax running back to the original due date

What Makes Behaviour “Deliberate”?

This question was definitively addressed by the Supreme Court in the landmark case of HMRC v Tooth [2021] UKSC 17. The case involved a taxpayer who had used a tax avoidance scheme promoted by HMRC-registered advisers. HMRC argued that an inaccuracy in the return was deliberate, which would have allowed them to invoke the 20-year time limit under section 36(1A).

The Supreme Court held that a “deliberate inaccuracy” requires the taxpayer to have known that what they were doing was wrong; that is, that the inaccuracy was intended. An inaccuracy that arises from a mistaken belief or from following professional advice that turned out to be incorrect, is not deliberate in the relevant sense, even if the taxpayer was aware that HMRC might disagree with their position.

This ruling has significant practical implications:

Taxpayers who genuinely believed they were following the law – even if the law turned out to operate differently – will not automatically be treated as deliberate defaulters
HMRC cannot invoke the 20-year window simply by labelling conduct as deliberate; they must actually demonstrate that the taxpayer knew their return was inaccurate
The distinction between a genuinely held but incorrect legal position and deliberate concealment is now more clearly drawn

Outram v HMRC [2026]: The 20-Year Window Tested in Practice

The Tooth principles were applied directly in the recent case of Outram v HMRC [2026] UKFTT 248 (TC), decided by the First-tier Tribunal in February 2026. The case concerned brothers who had participated in “Pendulum” arrangements marketed by the Montpelier Group: contracts linked to FTSE 100 movements structured to generate trading losses for tax purposes. The arrangements were conceded to be ineffective.

HMRC argued that the appellants had deliberately brought about a loss of tax, triggering the 20-year assessment window under s.36(1A) TMA 1970. The Tribunal disagreed. Crucially, it held that the appellants had genuinely relied on professional advice from Montpelier and had not understood or been made aware, that the necessary steps to establish a trade had not been taken. The Tribunal found there was insufficient evidence of blind-eye knowledge or deliberate concealment.

The appeals were allowed. HMRC’s 20-year assessments fell away and with them the accompanying penalty exposure at the higher “deliberate” rates.

The Burden of Proof: HMRC Must Establish Deliberate Conduct

A point that is often overlooked: where HMRC asserts deliberate behaviour, the burden of proof rests on HMRC, not on the taxpayer. HMRC must establish deliberate conduct on the civil standard (the balance of probabilities). The standard is lower than the criminal “beyond reasonable doubt” threshold, but it is a genuine burden. HMRC cannot simply assert that conduct was deliberate; it must produce evidence that proves it.

The Upper Tribunal confirmed in Martland v HMRC [2018] UKUT 178 (TCC) that the deliberate conduct standard requires subjective intent; objective recklessness alone is insufficient. If HMRC’s evidence only shows that a taxpayer should have known their position was wrong, but cannot show they actually knew it, the deliberate threshold is not met.

Discovery Assessments: An Additional Complication

The time limits discussed above apply to “discovery assessments” under section 29 TMA 1970. HMRC can only raise a discovery assessment where they have “discovered” that tax has been lost – that is, where information has come to their attention that was not already before them when the original return was processed.

This creates a threshold question that often arises in practice: did HMRC truly “discover” the loss or was the information already in their possession? If HMRC had sufficient information to raise the assessment earlier and failed to act, there is a credible argument that they cannot issue a fresh discovery assessment now, even within the applicable time limit.

The rules on discovery are complex and have generated significant case law. Whether a discovery is valid depends on the specific facts of each case and the information available to HMRC at the relevant time.

Enquiry Windows vs Assessment Time Limits

It is important to distinguish between two different HMRC mechanisms:

Section 9A enquiries – HMRC must open a formal enquiry into a self-assessment return within 12 months of the filing date. If they miss this window, they cannot open a routine enquiry into that return.
Discovery assessments – Even where the enquiry window has closed, HMRC can still raise a discovery assessment if they later obtain new information showing that tax has been lost, subject to the 4, 6 or 20-year limits.

This means that even if HMRC did not open an enquiry into your return when they could have done so, they can still pursue you years later via the discovery route, provided they satisfy the conditions for a valid discovery and act within the relevant time limit.

The Offshore Time Limit: 12 Years

For offshore matters – income or gains connected with a territory outside the United Kingdom – the Finance Act 2019 introduced an extended time limit of 12 years. This 12-year limit applies regardless of whether the behaviour was careless or deliberate and replaces the standard 4 and 6-year limits where offshore matters are involved. The 20-year limit for deliberate behaviour still applies where appropriate.

What You Should Do If HMRC Contacts You

If HMRC writes to you about a compliance check or investigation, the time limit that applies to your case will depend entirely on how HMRC characterises your conduct. It is therefore essential to:

Seek specialist advice immediately – do not respond to HMRC without first understanding which category of behaviour applies and what arguments are available to you
Challenge HMRC’s characterisation of your behaviour – if HMRC is asserting deliberate conduct in order to invoke the 20-year window, that assertion can be contested; the burden of proof is on HMRC
Review the validity of any discovery assessment – not every assessment HMRC raises is legally valid; your adviser should check whether the conditions for a valid discovery have actually been met
Consider voluntary disclosure – where there is an underpayment of tax, coming forward voluntarily will usually produce a significantly better outcome, including reduced penalties and a lower risk of prosecution

The further back HMRC can go, the larger the potential liability – not just in unpaid tax, but in penalties and interest. If you are facing an HMRC investigation, understanding which time limit applies is one of the most important questions your adviser will need to address.

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How Far Back Can HMRC Investigate?