HMRC Discovery Assessment Time Limits: 4, 6 & 20 Years

Every HMRC discovery assessment must be issued within a strict statutory time limit. If HMRC raises an assessment one day after that limit expires, the assessment is void, regardless of whether the underlying tax was actually due. Knowing which time window applies to your case is the first and often decisive question.

The 4-year standard window: s34 TMA 1970

Section 34(1) TMA 1970 provides that an assessment to income tax or capital gains tax may not be made more than 4 years after the end of the year of assessment to which it relates. This is the baseline, it applies in every case where HMRC cannot establish careless or deliberate behaviour by the taxpayer.

The 4-year window covers genuine errors: a figure transposed incorrectly, an income source overlooked due to an honest misunderstanding, an adviser error that the taxpayer had no reason to doubt. It also covers cases where HMRC is simply correcting a position that turns out to have been wrong in law.

For practical purposes, the 4-year period runs from the end of the tax year (5 April) in which the assessment could have been made. For a 2019/20 return filed in January 2021, the standard 4-year window closes on 5 April 2024 (the end of the 2023/24 tax year, four years after 2019/20). Any discovery assessment raised after that date is out of time unless HMRC can establish careless or deliberate behaviour.

The 6-year careless window: s36(1) TMA 1970

Section 36(1) TMA 1970 extends the assessment window to 6 years where the loss of tax was brought about by the taxpayer’s careless behaviour.

The word “careless” has a specific statutory definition drawn from Finance Act 2007 Schedule 24: a failure to take reasonable care. This is an objective standard, it asks whether a reasonable person in the taxpayer’s position, exercising the care that such a person would take, would have made the same error.

Key principles established by the tribunals include:

• Reliance on a competent and qualified adviser, acting in good faith, can amount to reasonable care on the taxpayer’s part, even if the advice was wrong
• Ignorance of the law is not, by itself, an excuse, but a taxpayer who takes active steps to seek advice and acts on it is in a very different position from one who simply ignores a known obligation
• The standard is not perfection. Minor or inadvertent errors that a careful person might still have made do not necessarily cross the threshold into carelessness
• HMRC carries the burden of proof. It must positively establish that the relevant behaviour was careless; the existence of an underpayment does not prove carelessness

This distinction matters greatly in practice. Where HMRC raises a discovery assessment purporting to rely on the 6-year window, the taxpayer’s advisers should always scrutinise whether HMRC has actually established carelessness or is simply relying on the fact that tax was underpaid.

The 20-year deliberate window: s36(1A) TMA 1970

Section 36(1A) TMA 1970 provides the longest time window: 20 years where the loss of tax was brought about by the taxpayer’s deliberate behaviour. This applies equally to offshore matters.

“Deliberate” in this context means that the taxpayer knew the return, claim or other document was inaccurate and chose to submit it anyway. This is a significantly higher bar than carelessness. It implies an element of conscious wrongdoing, not simply a failure of care, but an active decision to misstate the position.

The practical implications of HMRC invoking the 20-year window are severe:

• HMRC can reach back up to 20 years to assess tax (in theory to 2006/07 for an assessment raised in 2026)
• The penalty range for deliberate behaviour starts at 35% of the unpaid tax and can reach 200% for offshore matters
• The taxpayer’s statutory protection under s29(3) TMA 1970 (sufficient disclosure) is overridden by deliberate conduct under s29(5) TMA 1970

Again, HMRC must establish deliberateness, it is not sufficient for HMRC to point to a large underpayment and invite the tribunal to infer deliberate conduct. In contested cases, HMRC must plead and prove the specific acts or omissions that constitute deliberate behaviour.

The 12-year offshore window: s36A TMA 1970

Finance Act 2013 inserted section 36A into TMA 1970, creating an intermediate 12-year time limit for offshore tax losses. This applies where:

• The loss of tax involves an offshore matter or transfer (broadly: foreign income, overseas assets, transfers to or from offshore entities)
• The taxpayer’s behaviour was careless , the extended 12-year window does not require deliberateness

This provision was a deliberate policy decision to give HMRC more time to pursue offshore tax losses given the practical difficulties of obtaining information from overseas jurisdictions. It sits between the standard 6-year careless window (which applies to domestic matters) and the 20-year deliberate window.

Where both the 12-year window and the 20-year window could in principle apply (i.e., an offshore matter with deliberate behaviour), HMRC will rely on the 20-year window. The 12-year window primarily catches offshore underpayments that are careless rather than deliberate.

When does the clock start running?

The time limits run from the end of the year of assessment to which the assessment relates, that is, 5 April of the relevant year. The exact mechanics are set out in s34(1) TMA 1970 for the 4-year window and the equivalent provisions for longer windows.

Key points on the start of the limitation period:

• The clock runs from the end of the year of assessment, not from the date the return was actually filed. A late return does not give HMRC extra time under the 4-year standard window
• However, the precise calculation can differ where a return was not filed at all (as opposed to filed late) and where HMRC is relying on the longer careless or deliberate windows
• For discovery assessments, as distinct from enquiry closure notices, the clock runs to the date the assessment notice is actually issued by HMRC, not the date it is received by the taxpayer. A notice issued on 5 April and received on 7 April is still in time

Corporation tax: the equivalent rules

Corporation tax does not fall under TMA 1970 in the same way as income tax. Instead, Finance Act 1998 Schedule 18 paragraph 46 sets out equivalent discovery assessment powers for companies, with the same 4/6/20-year behaviour-based structure.

The key difference for corporation tax is that the standard assessment window is linked to the company’s accounting period return filing date. The 9-month “self-assessment” deadline for corporation tax (9 months and 1 day after the end of the accounting period) is the baseline, with the 4/6/20-year extensions applying in the same circumstances as for income tax.

Worked example

Take a taxpayer who filed their 2019/20 self-assessment return on 31 January 2021:

• 4-year standard window: closes 5 April 2024 (end of the 2023/24 tax year, 4 years after the end of the 2019/20 year of assessment)
• 6-year careless window: closes 5 April 2026
• 12-year offshore careless window: closes 5 April 2032
• 20-year deliberate window: closes 5 April 2040

If HMRC raises a discovery assessment in, say, June 2025, it must rely on at least the 6-year careless window to do so. If the underpayment involved only domestic income and HMRC cannot establish carelessness, the assessment is out of time and should be challenged.

Why a single day matters

The time limits are absolute. Courts and tribunals have consistently held that an assessment raised one day after a time limit has expired is void, there is no discretion to extend the period and HMRC cannot cure the defect by issuing a fresh assessment for the same matter.

In contested cases, the date on which the assessment was issued (and in what circumstances) is therefore critical. Representatives should:

• Check the date on the assessment notice against the applicable time limit before engaging with the substantive merits
• Request HMRC confirm the legal basis on which it claims the longer window applies (i.e., require it to specify carelessness or deliberateness)
• Obtain evidence of the actual date of issue in cases where timing is marginal (HMRC’s internal correspondence or despatch logs can be obtained via Freedom of Information requests)

See our guide to appealing a discovery assessment for the procedural steps, including how to raise a time-limit point on appeal.

Frequently asked questions

Related guides in this series

• HMRC discovery assessments: the complete guide
• The staleness defence against a discovery assessment
• How to appeal an HMRC discovery assessment
• Section 29 TMA 1970 explained
• Income tax investigation service
• Corporation tax investigation service