HMRC v Shaun Harte 2026: Clarifying Time Limits on Tax Assessments

HMRC v Shaun Harte reshapes how far back HMRC can go when assessing underpaid tax. The Upper Tribunal confirmed that not all errors are created equal, and that behaviour must be judged issue by issue, not in the round. For taxpayers facing enquiries or making disclosures, the decision draws a clear line on when the 20-year time limit applies and, just as importantly, when it does not.

HMRC has broad powers to raise assessments where a tax liability has been understated. These powers sit within a defined statutory framework, which sets out when HMRC can act and how far back it can go. Central to that framework are rules on taxpayer behaviour and the time limits that follow.

At a high level, the legislation draws a clear distinction between deliberate conduct, carelessness, and genuine error. Where a taxpayer has deliberately failed to pay the correct amount of tax, HMRC can assess up to 20 years. In cases of careless behaviour, that window is typically six years. Where the taxpayer has taken reasonable care and an error still arises, the limit reduces to four years.

While these categories appear straightforward, disputes often arise where multiple errors sit alongside each other, each with a different behavioural profile. The recent Upper Tribunal decision in HMRC v Shaun Harte provides important clarity on how those situations should be approached.

The facts of the case HMRC v Shaun Harte

In HMRC v Shaun Harte, the taxpayer had failed to report his full tax liability. The shortfall did not stem from a single issue, but from a number of separate errors.

Crucially, both HMRC and the taxpayer agreed that the behaviour behind each error was not uniform. Some arose from genuine mistakes where reasonable care had been taken. Others were the result of carelessness. A number were accepted as deliberate.

HMRC sought to apply the most severe consequence across the board. Their position was that the presence of deliberate behaviour within the overall picture justified applying the 20-year time limit to all errors, regardless of the nature of each individual issue.

The Upper Tribunal’s decision

The Upper Tribunal rejected HMRC’s approach.

It held that each error must be considered independently when determining whether an assessment is valid and which time limit applies. The existence of deliberate behaviour in one area does not extend the assessment window for unrelated errors that arose from carelessness or genuine mistake.

This finding reinforces a key principle, the statutory test is applied by reference to the behaviour that caused the specific loss of tax, not the taxpayer’s conduct in aggregate.

Why this matters in practice

This decision has immediate relevance for the way tax enquiries and disputes are handled.

In many cases, particularly those involving complex affairs or historic issues, it is common to uncover a mix of behaviours. A taxpayer may have taken reasonable care in some areas, been careless in others, and acted deliberately in a limited number of instances.

Following this judgment, HMRC cannot rely on the most serious behaviour identified to extend the time limit across the entire enquiry. Each adjustment must stand on its own footing.

That creates a more balanced outcome. It ensures that the statutory time limits operate as intended and prevents a form of “behavioural contagion” where one deliberate act extends HMRC’s reach into otherwise compliant periods.

Implications for COP9 cases

The decision is particularly relevant in the context of Code of Practice 9 (COP9) investigations.

Under COP9, a taxpayer suspected of deliberate behaviour is invited to make a full disclosure of irregularities. In return, HMRC agrees not to pursue a criminal investigation, provided the disclosure is complete and accurate.

These disclosures often involve multiple issues spanning several years. Some may clearly fall within deliberate conduct, while others reflect weaker behavioural findings.

The Upper Tribunal’s ruling confirms that the applicable time limits must be applied issue by issue. Even within a COP9 framework, HMRC cannot automatically apply the 20-year window to all disclosed matters.

This provides a clearer basis for negotiating settlements and assessing historic exposure. It also reinforces the importance of carefully analysing the behaviour attached to each adjustment during the disclosure process.

A broader policy perspective

The outcome also aligns with HMRC’s wider compliance objectives.

If HMRC’s position had succeeded, taxpayers entering disclosure processes would face significantly increased exposure, even for non-deliberate errors. That would risk discouraging voluntary disclosures, particularly where historic issues are complex and varied.

By contrast, the Tribunal’s approach preserves proportionality. It ensures that penalties and time limits reflect the nature of the underlying behaviour, while maintaining confidence in the disclosure regime.

Key takeaway HMRC v Shaun Harte

The HMRC v Shaun Harte decision provides welcome clarity on how assessment time limits should be applied where multiple errors are present.

Each error must be tested on its own facts. Deliberate conduct in one area does not extend HMRC’s powers in respect of unrelated issues. For taxpayers and advisers, this reinforces the need for a detailed behavioural analysis in any enquiry or disclosure.

In practice, the ruling limits HMRC’s ability to apply extended time limits indiscriminately and supports a more measured, fact-specific approach to resolving disputes

If you are facing a COp9 or any other HMRC dispute please reach out to a member of our team

The full final decision on HMRC v Shaun Harte