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HMRC internal manual

Compliance Handbook

Assessing Time Limits: Extended time limits: What is deliberate behaviour

The 20-year time limit applies where tax has been under-assessed or under-declared, or over-repaid or wrongly credited, because of a deliberately inaccurate return or other document.

A deliberate inaccuracy in a document occurs when a person (or another person acting on behalf of that person) knowingly gives HMRC an inaccurate document.

Examples of actions that might lead to a deliberate inaccuracy in a document include

  • knowingly failing to record all sales, especially where there is a pattern to the under-recording, such as omitting all transactions with a particular customer or at a particular time of the week, month or year
  • describing transactions inaccurately or in a way likely to mislead
  • giving a VAT return to HMRC that includes a figure of net VAT due that is too low because the person does not have the cash at that time to pay the full amount, and later telling HMRC the true figure when he has the funds to pay
  • similarly declaring less tax due for aggregates levy, climate change levy, landfill tax or excise duty because the person does not have the funds at that time to pay the full amount
  • claiming a deduction for personal expenses of such a size or frequency that the inaccuracy must have been known
  • knowingly making an understatement of consideration on SDLT1 compared to Land Registry form (TR1) to reduce the SDLT payable
  • knowingly making a duplicated claim for repayment of SDRT
  • knowingly claiming a higher (than is just and reasonable) proportion of shared costs in a taxable field for petroleum revenue tax
  • knowingly omitting or understating the value of a property for inheritance tax.

A person who sends us a document containing a deliberate inaccuracy may assert that they did not intend to cause a loss of tax. For the purposes of assessing that loss of tax, the person will be treated as having deliberately brought about the loss of tax which resulted from the inaccuracy whether or not it was their intention.

Although HMRC can make assessments to recover any tax lost, we also have a criminal investigation policy and will refer the most serious cases for consideration of criminal proceedings where appropriate.

For examples of deliberate behaviour and its effect upon the assessing time limit, see CH53800. You will find further help in establishing behaviour in the guidance for the specific offence that has led to tax being under-assessed or under-declared or over-repaid or wrongly credited.

Note that the time limit for failure to notify is 20 years

  • whether or not the failure was deliberate, see CH53900,
  • but not for obligation to notify for excise duties.