HMRC’s information gathering powers apply to an 'investigation or enquiry of any kind' to check the tax position, which extends to “past, present and future” tax liabilities. On the face of it, this seems to allow HMRC to ask for all sorts of historic documents, and they frequently do so.
However, the assessing time limits must also be considered, as a further requirement is that the data requested is “reasonably required”. If, for example, a document relates to a transaction in a period that has become final, it is unlikely that the document can be reasonably required by HMRC.
Therefore, HMRC will not usually need to see a document that was entirely created more than four years ago, as such an old document would normally only affect a tax position that can no longer be changed, due to the expiration of the assessment time limit. However, this may not apply if careless or deliberate behaviour is apparent, for which the assessment time limit could be extended to six or 20 years, respectively. Remember that the burden of proving such behaviour is on HMRC.
When might old documents still be relevant to HMRC?
Another point to consider is that an old document might affect the tax position of a later period. For example, it may relate to the original purchase of an asset and, as such, is needed to check the capital gain in a later period. In this case, a request for the document by HMRC may well be reasonable. That said, each information request by HMRC should be carefully considered on its own merits.
We frequently see HMRC asking for old data and so if you have an open enquiry or investigation and HMRC appears to be making excessive demands, please contact a member of Crowe’s Tax Disputes and Investigations team.