Section A

HM Revenue & Customs (HMRC) has the power to raise a discovery assessment if they discover a loss of tax. If the loss of tax was brought about carelessly by the taxpayer, what is the maximum time limit for HMRC to raise a discovery assessment?

Answer options:

4 years from the end of the relevant tax year.

6 years from the end of the relevant tax year.

12 years from the end of the relevant tax year.

20 years from the end of the relevant tax year.

How to approach this question

Recall the HMRC time limits for discovery assessments based on taxpayer behavior: 4 years (basic/innocent), 6 years (careless), 20 years (deliberate).

Full Answer

B.6 years from the end of the relevant tax year.✓ Correct

Under the UK tax administration framework, the standard time limit for a discovery assessment is 4 years. However, if the loss of tax is due to the taxpayer's careless behavior, this is extended to 6 years. For deliberate behavior, it is 20 years.

Common mistakes

Confusing the 6-year careless limit with the 20-year deliberate limit.

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