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How far back can tax investigations go?

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People don’t often hear from the taxman, that is until something might be wrong. This can then trigger all kinds of questions and more. If you do find yourself in this situation, we can help. We offer the best support with tax enquiries and investigations Soho clients can ask for.

Tax enquiries and investigations SohoIt could be that someone is avoiding payments accidentally or on purpose. Whatever the case, when HMRC suspects it is happening, they will launch an investigation. The aim of this is to reclaim any money people owe. In addition, culprits will have to deal with the HMRC penalties for not following the rules.

Most people wonder when they are subject to a tax investigation, “why me?” and how far back will they investigate. We will take a closer look into the latter.

So, how far back can they investigate?

Tax returns can result in an investigation by HMRC and sometimes, it might turn out that what they find gets them interested. This might be enough to result in them digging into the past tax affairs of an individual or a company. In fact, it appears as though this is happening more frequently in order to minimise tax avoidance.

How far back HMRC looks will depend on the suspected seriousness of the case. For instance, if they do suspect it is a case of deliberate tax evasion, they might end up investigating 20 years back. It is more common however that they will be looking into a careless tax return, in which case they can look 6 years back. If it is an innocent error, they will investigate up to 4 years back.

How do they start?

Typically, investigations start off with enquiring into the tax return for last year. When looking at recent documents they will try to determine whether:

  • There have been any mistakes. If there are none, then they will close their investigation.
  • Any errors were innocent mistakes, in which case HMRC might look 4 years back.
  •  The mistakes were because of negligence, which can result in them looking up to 6 years back.
  • Mistakes were made on purpose in order to try and avoid paying tax. When this is the situation, they might go 20 years back.

At any point of the investigation HMRC might change their view and alter how far back they look. The further back they go, the more stressful it can be. The volume of information they will want from you can soon become overwhelming. Of course though, any tax investigation by HRMC can be a lot to deal with. This is why you should seek out experts who can offer you specialist assistance with everything going on. This way you can know you are making the right decisions.

Looking for help with tax enquiries and investigations in Soho?

Our 30+ years of experience and extensive knowledge when it comes to accounting is why we should be your first choice. Brian Lonis & Co Accountants can provide you with support for tax enquiries and investigations in Soho in addition to services such as auditing, bookkeeping, and much more.

Browse through the site to learn more about our work and don’t hesitate to get in touch with us to speak to the team.