What Time Limits apply to HMRC Compliance Checks?

HMRC has the authority to investigate the tax affairs of every private and business taxpayer, and given the rise in the number of compliance checks in recent years, it seems this is a route they are increasingly willing to take. HMRC’s primary line of enquiry when investigating tax affairs is to use a compliance check, which is a formal tax investigation. You will be informed of the opening of this kind of investigation by way of an Information Notice, which requires the taxpayer to provide answers to the questions raised by HMRC.

A compliance check is separate to a tax enquiry. To start a compliance check, HMRC must have some reason to expect that tax has been underpaid. There are also certain time restrictions that apply to compliance checks. The normal time period for the tax to be assessed under a compliance check is 5 years and 10 months after the end of the tax year in question. However, it is usual for compliance checks to be carried out within 12 months of the tax year they relate to.

It is not uncommon for HMRC to ask for information concerning other years when conducting a compliance check. In cases where HMRC believes there is fraudulent or negligent conduct on behalf of the taxpayer, the time limit can be extended by up to 20 years.     

To start a compliance check HMRC must have reason to suspect that tax has been underpaid. A compliance check cannot be a ‘fishing expedition’.

The normal time period during which tax may be assessed under a compliance check is 5 years and 10 months after the end of the tax year concerned.   

The time limit can be extended up to 20 years in cases where there is negligent or fraudulent conduct by the taxpayer.

It is also not uncommon for HMRC to ask for information concerning other years when conducting an enquiry into a particular year.

However, the old rules still exist and remain relevant. For a submitted tax return, a formal enquiry still needs to be opened within the relevant time limits.

Need help?

If you are concerned about an up and coming compliance check and you have significant tax arrears for corporation tax, late VAT bill payments, or PAYE that cannot be paid then call 08000 746 757 for urgent specialist help.

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