How far back does the tax man look?

[GuinnessMK]

I've not had the simplest employment / tax position over the past few years, with periods of genuine self employment, unemployment, agency work, permie PAYE role, unemployment and back to agency work, and now back to a permie PAYE role.

I've now got a tax demand, claiming I underpaid last year. Looking at the detail, it looks like the underpayment was due to a carry forward of an underpayment from the year previously. I had a tax return, including all my expenses ready to submit that year, but the revenue sent me a letter taking me off self assessment and putting me back onto PAYE, so I couldn't claim my expenses against the tax for the previous year, hence the underpayment.

Am I likely to get anywhere trying to explain this to them, or do I just bite the bullet and pay the back tax?

I guess they look back as far as they want when it's in their favour, but when it's to your benefit, is there a time bar?

The amount they want is probably about a months take home

[sumo69]

You really need to speak to a accountant - you are well beyond your skill set I am afraid.

D

[anonymous-user]

All the expenses remain as valid as the income for as long as they can go back.

[Robertj21a]

I thought the tax man went back up to 7 years.

[Eric Mc]

The tax man can go back as long as he wants - depending on the circumstances. The time limits vary depending on the reasons why they want to look at previous years.


One important point is that a taxpayer can go ahead and submit a self assessment tax returrn even if HMRC has written to the taxpayer telling them that a return won't be due. HMRC decides that a tax return isn't due based on what they saw on the previous tax return. That is a often a flawed logic to use for HMRC because the following year's circumstances may dictate that a return be completed. If that is the case and the taxpayer follows the advice of HMRC and DOESN'T submit a return - then it is the TAXPAYER who has failed in his duty to submit a return when he should have.

And yes, the OP needs to see an accountant.

[throt]

GuinnessMK said:

I've not had the simplest employment / tax position over the past few years, with periods of genuine self employment, unemployment, agency work, permie PAYE role, unemployment and back to agency work, and now back to a permie PAYE role.

I've now got a tax demand, claiming I underpaid last year. Looking at the detail, it looks like the underpayment was due to a carry forward of an underpayment from the year previously. I had a tax return, including all my expenses ready to submit that year, but the revenue sent me a letter taking me off self assessment and putting me back onto PAYE, so I couldn't claim my expenses against the tax for the previous year, hence the underpayment.

Am I likely to get anywhere trying to explain this to them, or do I just bite the bullet and pay the back tax?

I guess they look back as far as they want when it's in their favour, but when it's to your benefit, is there a time bar?

The amount they want is probably about a months take home

I would talk to them if it was me. Just be genuine because they are there to help and listen. Be cheaper coming to a resolution directly with them and then not using an accountant.

[Eric Mc]

And they also don't give the right advice - so beware relying solely on what HMRC says.