HMRC will investigate further back the more serious they think a case could be. If they suspect deliberate tax evasion, they can investigate as far back as 20 years. More commonly, investigations into careless tax returns can go back 6 years and investigations into innocent errors can go back up to 4 years.
How do HMRC find out about tax evasion?
HMRC uses very sophisticated software called Connect. This analyses large volumes of information, detecting patterns, connections and inconsistencies to flag up possible tax evasion.
Why are people being chased for money they owe to HMRC?
They have not paid the right amount of tax under the Pay As You Earn (PAYE) system, or have fallen behind with Self Assessment (SA) tax payments; or They have claimed tax credits and been paid too much. Confusingly, these two situations are described in opposite ways, that is:
What happens if you do not pay the right amount to HMRC?
If you have not paid the right amount at the end of the tax year, HMRC will post you a tax calculation. This can be a P800 or a Simple Assessment letter. Your tax calculation will show you how to get a refund or pay tax you owe. You might get a P800 if you: You will not get a P800 if you’re registered for Self Assessment.
Why are low income people in debt to HMRC?
People on low incomes might be in debt to HMRC for two main reasons: They have not paid the right amount of tax under the Pay As You Earn (PAYE) system, or have fallen behind with Self Assessment (SA) tax payments; or They have claimed tax credits and been paid too much. Confusingly, these two situations are described in opposite ways, that is:
Why do I owe tax credits to HMRC?
That you have a ‘tax credits over payment’ (been paid too much and may need to pay some back). The reason for this difference in description is that tax is something you pay and that tax credits are a benefit that you claim. In either case, you may owe money to HMRC and will need to do something about it.
