How far back can the taxman enquire in uk?

talkinpeace

Same trade or different?

Frugaldom

talkinpeace wrote: »

Same trade or different?

Same category, similar but not identical work, different location and working from home now as opposed to having premises.

Hoddie_2

HMRC can levy a £3,000 penalty if you don't keep adequate records.

talkinpeace

#13 In that case you'd be best pushing to have it treated as a new start. Otherwise they will try to connect your profit rates with the other batch of income.
Generally I suggest that self employed people planning to take a year or two out keep their registrations open but dormant - just in case.

#14 Where does it say that on their site?
The fine generally cannot be greater than the tax owed.

Murdina

The way to think about record retention is to look at it on a year by year basis. If you are in business for any tax year, then you must keep your records until the 5th anniversary of 31 Jan following the end of that tax year (this is a legal requirement). The detailed rules are set out by HMRC at http://www.hmrc.gov.uk/manuals/salfmanual/salf211.htm#2
None of this alters the fact that if they can show fraud or negligence, then they can assess you to extra tax up to 20 years later.
(Historically, everything hinged on 6 year periods, in line with the statute of limitations in other areas. The current period for retaining business records has been taken from this and tailored to fit self-assessment deadlines, and comes out near enough 6 years.)

david69_2

nykmedia wrote: »

David69 - I just spotted this thread and know what you mean about the restart. I was self employed for quite a few years up until 2001, when I ceased being self-employed and became PAYE. In 2004, I reregistered for self employment and I was classed as having started again by the looks of things. Hope this helps.

Thanks for that .

mikewebs

Basically, from what I've been told, they can go back as far as they want until they are satisfied that there are no errors i.e. unlimited

johnllew

mikewebs wrote: »

Basically, from what I've been told, they can go back as far as they want until they are satisfied that there are no errors i.e. unlimited

Then you've been told wrong; it's 20 years max.

http://www.hmrc.gov.uk/manuals/emmanual/EM3270.htm

Extended Time Limits

Where there has been fraudulent or negligent conduct the time limit for making a discovery assessment is extended for an individual to 20 years from 31 January next following the tax year to which it relates.....

Thus the Section 36(1) time limit for an individual for 1996/97 is 31 January 2018.

jimmo

There is really no point in retaining records longer than the 6 years referred to by Murdina at post #16.
Yes the taxman can go back 20 years but his basis for going back that number of years will always be on the lines that following an enquiry into a specific year he has proved that your records for that particular year are seriously inaccurate.
You are therefore, in the taxman’s eyes, either a liar and a cheat or, at best, totally incompetent.
Either way around, your business records are not a reliable basis for establishing your taxable profits. The taxman then only needs to make estimates which he can justify as being reasonable.
It really doesn’t happen very often but when the taxman does seek to go back more than 6 years your discredited records will be of no use.

johnllew

jimmo wrote: »

There is really no point in retaining records longer than the 6 years referred to by Murdina at post #16.................
It really doesn’t happen very often but when the taxman does seek to go back more than 6 years your discredited records will be of no use.

I disagree. The taxman will often use the accretion of capital over the years to determine what he thinks your profits were. Keeping records for those years will enable you to explain where the money came from which may be to your advantage.

I've done nothing wrong but keep all records for 20 years just in case I have to demonstrate that.