Can HMRC investigate an earlier tax year?
HMRC is bound by a rigid timetable in which it can open an enquiry into your or your business’s tax returns. This is known as the “enquiry window”. If your return is submitted to HMRC:
on or before the normal deadline, it has up to twelve months from the date your return was submitted to start an enquiry. After the normal deadline, the enquiry window runs until the next quarter day (30 April, 31 July and so on) following the first anniversary of when you submitted your return. For example, if you submitted your 2016/17 return on 1 March 2018 (a month and a day late), the enquiry window ends on 30 April 2019.
If you amend your tax return at any time within the twelve months following the deadline for submitting, the enquiry window for the original return will not change but there will be a separate enquiry window for the amendment itself. It runs from the date you made the amendment to the quarter day that follows its first anniversary.
In case an enquiry is started after the window for the original tax return, but within that for an amendment, HMRC can only make enquiries regarding the amendment.
If you are asked for information about periods prior to that covered by the tax return that is being investigated, you are within your right to refuse to provide it.
If an inspector wants to question a figure outside the enquiry window, they must raise a special assessment, known as a discovery assessment and these too are governed by rules which prevent them taking liberties.