How far back can HMRC investigate?

HMRC's time limit for going back depends on what caused the inaccuracy, not on how far in the past it happened. The starting point is 4 years where reasonable care was taken but a mistake still occurred.

That extends to 6 years if HMRC can show carelessness, and up to 20 years where behaviour was deliberate, including deliberately not telling HMRC about tax due.

So yes, HMRC can go back 20 years, but only in the more serious category of case, not as standard practice for everyday errors.

Section 34 Taxes Management Act 1970 sets the general 4 year time limit for assessments, running from the end of the tax year for individuals or the end of the accounting period for companies.

Section 36 extends this where there's a loss of tax brought about carelessly (6 years) or deliberately (20 years). These extended time limits work alongside HMRC's discovery assessment powers, which let HMRC raise an assessment outside the normal enquiry window when it discovers an underpayment.

A related rule under section 29 Taxes Management Act 1970 governs when HMRC can raise a discovery assessment at all, generally requiring that the loss of tax wasn't something a competent officer could reasonably have spotted from the return alone, unless careless or deliberate behaviour is involved.

If HMRC opens an enquiry into one year but suspects a pattern, it can look further back once it establishes carelessness or deliberate conduct, not just at the single return under enquiry.

The behaviour classification matters enormously. The gap between 4, 6 and 20 years usually comes down to how HMRC characterises what happened, so how you and your adviser respond to early questions can shape which time limit ends up applying.

Keep records for longer than the statutory minimum where there's any doubt about how a transaction was treated, since being able to explain a decision from years ago helps counter an assumption of carelessness.

A dispute over time limits, or over whether behaviour was careless rather than deliberate, can involve detailed evidence gathering and negotiation, which adds to professional costs.

Growth plan clients get free tax investigation insurance as standard, which covers professional fees if HMRC opens an enquiry or raises a discovery assessment. See /fees for details.

Don't assume a discovery assessment outside 4 years is automatically valid; check whether HMRC has actually established carelessness or deliberate behaviour.

Don't discard business records early just because you're past the statutory minimum retention period.

Don't accept HMRC's behaviour classification without challenge, since it directly affects how far back it can assess and what penalty range applies.