Discovery Assessment Time Limits for Landlord Tax Enquiries (TMA 1970 s.29)

The first question to ask in any landlord enquiry is which time-limit bracket HMRC is relying on. The four brackets under the Taxes Management Act 1970 sit at 4, 6, 12 and 20 years, and which one applies depends on behaviour, on whether the matter is offshore, and on the precise statutory provision under which the assessment is being made. Getting the bracket wrong is one of the most expensive mistakes a landlord can make: a defensible time-limit argument can vacate an assessment in full.

This page walks the four brackets, the underlying section 29 discovery power, the section 29(4) and 29(5) unlock conditions, the competent-officer test from Veltema and Sanderson, and the deliberate-behaviour test the Supreme Court set in HMRC v Tooth [2021] UKSC 17. It then maps two worked landlord scenarios onto the framework and walks the appeal-and-time-limit interaction.

The section 29 discovery power

HMRC's power to assess outside the standard enquiry window is in TMA 1970 section 29. Section 29(1) requires the officer to have "discovered" one of three things: tax that ought to have been assessed but has not, an assessment that is or has become insufficient, or relief that is or has become excessive. The discovery threshold is a low bar in practice. HMRC need only come to a view that there is an insufficiency. That view can be triggered by a Connect-system data match, a CRS feed from an overseas tax authority, a third-party report from the Land Registry or a lettings platform, or any other source of information.

Once a discovery has been made within section 29(1), HMRC can make an assessment outside the section 9A enquiry window only if one of two unlock conditions in section 29(4) or 29(5) is met.

Section 29(4) is the behaviour-based unlock: the situation in section 29(1) was brought about carelessly or deliberately by the taxpayer or by a person acting on the taxpayer's behalf. This unlocks the 6-year careless time limit and the 20-year deliberate time limit (see below).

Section 29(5) is the competent-officer unlock: at the time the enquiry window for the relevant return closed, an officer could not have been reasonably expected, on the basis of the information then available, to be aware of the under-assessment. This is the path HMRC must take where there is no behaviour element. The leading authorities are Veltema v Langham [2004] EWCA Civ 193 and Sanderson v HMRC [2016] EWCA Civ 19 in the Court of Appeal, and HMRC v Tooth [2021] UKSC 17 in the Supreme Court.

The four time-limit brackets

The brackets sit in four separate provisions of TMA 1970. They are not alternative or overlapping in a way that gives HMRC a choice. They are sequential: the longest available bracket on the facts applies.

Ordinary 4-year limit: TMA 1970 section 34

The default rule is in section 34: an assessment to income tax or capital gains tax may be made not later than 4 years after the end of the year of assessment to which it relates. The 4 years runs from the end of the tax year (5 April following the relevant year), not from the filing deadline. For 2025/26, the ordinary limit expires on 5 April 2030. No behaviour element is required. This is the limit that applies where the landlord has been entirely innocent and the matter is not offshore.

Careless 6-year limit: TMA 1970 section 36(1)

Where the loss of tax was brought about carelessly by the taxpayer or by a person acting on the taxpayer's behalf, section 36(1) extends the limit to 6 years from the end of the tax year. Carelessness is judged objectively against what would be expected of a prudent taxpayer with rental income. Common landlord patterns that drive HMRC into the careless bracket include missing receipts for repair claims that turn out to be capital improvements, software defaulting errors that under-declare income, transposed figures from a lettings agent statement, or relying on incorrect rule-of-thumb tax positions. HMRC carries the evidential burden of showing carelessness; a competent-professional-advice defence is often the strongest landlord response.

Deliberate 20-year limit: TMA 1970 section 36(1A)

Where the loss of tax was brought about deliberately by the taxpayer or by a person acting on the taxpayer's behalf, section 36(1A) extends the limit to 20 years. The Supreme Court in HMRC v Tooth [2021] UKSC 17 set the deliberate-behaviour test at subjective knowing-falsity. The taxpayer must have known the figure being submitted was wrong. An "ought to have known" finding is not sufficient. Tooth has materially narrowed HMRC's ability to assert deliberate behaviour in marginal cases, and the 20-year bracket should not be conceded on the strength of HMRC's initial characterisation.

Offshore 12-year limit: TMA 1970 section 36A FA 2019

The newest bracket and the most commonly misread. Section 36A was inserted into TMA 1970 by section 80 of the Finance Act 2019. It gives HMRC up to 12 years from the end of the tax year to assess offshore income tax or capital gains tax matters, regardless of behaviour. There is no careless or deliberate qualifier on section 36A. It applies to innocent-error offshore matters that pre-2019 would have been assessable only within the 4-year ordinary limit. Two important scope points:

• Section 36A applies to income tax and capital gains tax only. Inheritance tax has its own time-limit framework under IHTA 1984 and is not within section 36A.
• Section 36A operates independently of the territory categorisation under Schedule 24 paragraph 4A. A landlord with Spanish, French, Portuguese or any other EU rental income is within section 36A's 12-year window for innocent-error offshore matters, even though those territories are Category 1 (full information exchange) for penalty purposes.

The practical effect: any landlord-side defence based on "I made an honest mistake on my Spanish rental" buys you the 4-year limit pre-2019 but only blunts the careless-bracket entry post-2019 (where you remain within section 36A's 12-year offshore reach).

The section 29(5) competent-officer test

Where HMRC is using the section 29(5) unlock (the non-behaviour path), the test is whether at the time the enquiry window for the relevant return closed, an officer could not have been reasonably expected, on the basis of the information then available, to be aware of the under-assessment. The competent-officer test has two strands: what information was on file, and what an officer of ordinary diligence would have done with it.

The Veltema line of cases ([2004] EWCA Civ 193) established that the "information made available" includes anything filed with HMRC or made available to HMRC by the taxpayer at or before the relevant time. Sanderson v HMRC [2016] EWCA Civ 19 confirmed that the standard is one of a reasonable officer who is not a tax specialist, and is not assumed to have specialist knowledge of every line in every manual. Tooth [2021] UKSC 17 added that the deliberate-test for section 29(4) (and section 36(1A)) requires subjective knowing-falsity, which has tightened the threshold at the deliberate end.

Operationally, a landlord arguing under section 29(5) will look at three things: (a) what was on the white-space disclosure of the return itself, (b) what was on related returns (partnership returns, joint-property returns, CGT returns), and (c) what HMRC had received from third parties (Connect, Land Registry, CRS feeds). The narrower HMRC's actual information position at the enquiry-window closing date, the stronger the section 29(5) defence.

The Tooth deliberate-behaviour reset

HMRC v Tooth [2021] UKSC 17 is the most important recent development in the discovery-assessment landscape. The Supreme Court considered what "deliberate" means for the purposes of section 29(4) and (by extension) section 36(1A) and Schedule 24 paragraph 3 (the deliberate behaviour band for inaccuracy penalties). The court held that deliberate means subjective knowing-falsity: the taxpayer must have known the figure being submitted was wrong at the time of submission. Negligent, careless, reckless or "wilful blindness" cases do not qualify.

The downstream effects are material. First, the 20-year bracket under section 36(1A) is harder for HMRC to invoke than it used to be. Second, the section 29(5) deliberate limb is also narrower. Third, Schedule 24 paragraph 3 deliberate penalty bands (70 per cent and 100 per cent under the inaccuracy regime) are similarly narrower, which has flowed through to the operational position on every landlord penalty case where the deliberate band is in play. The full Schedule 24 penalty matrix covers the band-by-band figures.

Worked examples

Scenario 1: UK rental, careless under-declaration of repair-vs-capital. A higher-rate landlord with three UK buy-to-lets misclassifies £30,000 of capital improvements (a new bathroom, a re-wired kitchen, a new boiler installation) as deductible repairs across the 2022/23 and 2023/24 tax years. HMRC opens an enquiry in November 2026 following a routine data review. Behaviour: careless (the receipts existed, the landlord did not seek competent advice on the capital-vs-revenue line). Tax loss: £12,000 (40 per cent of the £30,000 disallowed expenditure). Time limit: 6 years under section 36(1) from end of 2022/23 (5 April 2023) = expiry 5 April 2029. HMRC is within the bracket and can assess. The landlord's best defence is to argue band classification (careless versus reasonable-care error) and to seek suspension of any resulting Schedule 24 penalty under paragraph 14.

Scenario 2: Spanish holiday let, innocent-error under-declaration of foreign rental income. The same landlord owns a Spanish holiday let yielding €25,000 a year. The landlord declared the income to the Spanish tax authority but, on the strength of an honest misreading of the UK rental rules for foreign property, did not declare the foreign rental income on UK self-assessment returns for the 2014/15 to 2024/25 tax years. HMRC opens an enquiry in November 2026 following a CRS data feed from Spain. Behaviour: innocent error (no carelessness; the landlord believed the foreign tax credit fully discharged the UK liability). Time limit: 12 years under section 36A from end of relevant tax year. HMRC can therefore assess 2014/15 (expires 5 April 2027), 2015/16 (5 April 2028) and every subsequent year through 2024/25 (5 April 2037). Spain's Category 1 status (full information exchange) does not shorten section 36A's reach; it only affects the Schedule 24 penalty bands, not the discovery limit.

The "person acting on the taxpayer's behalf" extension

Sections 36(1) and 36(1A) both extend the time limit where the loss of tax was brought about carelessly or deliberately not just by the taxpayer, but also by "a person acting on the taxpayer's behalf". This phrase carries operational weight in landlord cases because most landlords use an accountant, a tax adviser, or a lettings agent who in turn engages with HMRC.

The leading FTT and UT authorities on the scope of "person acting on behalf" point to a real agency relationship: the person must have been instructed by the taxpayer to deal with the relevant tax matter and must have acted within that instruction. A lettings agent who passes on figures to a landlord's accountant is usually not within the phrase for the agent's own errors, but the accountant who then files the return on the landlord's behalf is within it. Careless behaviour by an instructed tax adviser will typically extend the limit to 6 years; deliberate behaviour to 20.

The landlord defence against an imputed-agent extension is to show that the carelessness was actually the agent's, not the taxpayer's, and that the taxpayer themselves took reasonable care in selecting and instructing the adviser. The reasonable-care-in-instruction defence has been recognised at the FTT level and remains the strongest landlord position against an imputed-agent careless extension. It is not a complete defence (HMRC can still pursue the 6-year limit) but it is a powerful factor in penalty mitigation under Schedule 24.

Section 43 claim-deadline parallel

TMA 1970 has a sibling 4-year limit on the claim side. Section 43 sets the standard limit for making a claim to income tax or capital gains tax at 4 years after the end of the relevant tax year. Where a landlord has been over-paying tax (for example, by missing a loss claim, a CGT relief claim, or a foreign tax credit), the section 43 4-year window is the corresponding limit on getting the money back.

Section 43 and section 34 run on the same 4-year schedule but in opposite directions. HMRC can assess up to 4 years back (section 34, plus any extension under section 36 or 36A); the taxpayer can claim up to 4 years back (section 43). The result is a symmetric 4-year window for innocent-error cases, with section 36 extending HMRC's reach where behaviour applies but no corresponding extension for taxpayer claims. Landlords running historic-position reviews should treat the section 43 4-year claim window as a hard ceiling for refunds: there is no behaviour-based extension of section 43.

Multi-year exposure stacking

The most expensive landlord cases are those where the time-limit brackets stack across multiple years. A single careless under-declaration in one year attracts a single 6-year limit on a single year's loss. A pattern of careless under-declaration across five years attracts the 6-year limit on each of those five years. Where the same conduct is found to be deliberate, the 20-year limit applies on each year independently.

For offshore cases under section 36A, the 12-year window applies on a year-by-year basis. A landlord with 12 years of innocent-error Spanish rental under-declarations faces 12 separate assessments, each within its own 12-year window. The earliest year on which the 12-year limit has not yet expired drops off each subsequent tax year, creating a rolling window that landlords sometimes mis-read as a one-off 12-year reach back.

The interaction with the section 9A enquiry window

Section 29 applies once the section 9A enquiry window has closed. The section 9A window is 12 months from the date the return is delivered or, where the return is filed before the 31 January statutory filing date, from 31 January following the tax year. For a 2025/26 return filed on 15 October 2026, the enquiry window closes on 15 October 2027. After that date, HMRC must use section 29 to make any assessment.

Where the enquiry window is still open, HMRC does not need to unlock section 29 and the section 29(4) / (5) conditions are not in play. Inside the window, HMRC's powers are at their broadest. Outside the window, the section 29(4) behaviour unlock or the section 29(5) competent-officer unlock must be met before an assessment can be made.

Operational playbook for landlords

When a discovery assessment arrives, the framework for response is:

1. Within the first 7 days. Identify the year of assessment and the time-limit bracket HMRC is relying on. The bracket should be discernible from the assessment letter; if not, request clarification within the appeal window.
2. Within the first 14 days. Test the time-limit position. Is the assessment within the 4 / 6 / 12 / 20 year window from the end of the relevant tax year? An assessment outside the window is invalid and can be vacated on appeal.
3. Within the first 21 days. Test the section 29(4) / (5) unlock. Where HMRC is using section 29(5) (no behaviour), what was the information available to HMRC at the enquiry-window closing date? Where HMRC is using section 29(4) (behaviour), what is the evidence for careless or deliberate conduct?
4. Within the 30-day appeal window. Lodge a notice of appeal under TMA 1970 section 31A. The window is 30 days from the assessment date. ADR engagement does not pause the clock.
5. If section 36A is in play. Assess the offshore disclosure position urgently. Section 36A's 12-year reach can capture innocent-error offshore matters that would have been time-barred pre-2019.

The time-limit defence is procedural, not substantive. An assessment outside the relevant bracket falls regardless of the underlying merits. This is why getting the bracket right is the highest-value first analytic step in any discovery-assessment response.

Schedule 24 penalty interaction

The time-limit framework under sections 29, 34, 36 and 36A determines whether HMRC can assess in the first place. The Schedule 24 FA 2007 penalty framework then determines what penalty attaches to any assessment that does get made. The two are independent: a 6-year careless discovery assessment under section 36(1) attracts a Schedule 24 careless penalty (30 per cent maximum, 0 per cent unprompted minimum); a 20-year deliberate assessment under section 36(1A) attracts a Schedule 24 deliberate penalty (70 per cent or 100 per cent maximum); a 12-year section 36A assessment can attract no penalty at all if the underlying behaviour is innocent error. The full Schedule 24 mechanics are covered in our depth page on Schedule 24 penalty behaviour bands. The procedural appeal-route framework is covered separately in our coverage of HMRC late-filing penalties and the appeal route.

If HMRC has issued a discovery assessment against you and you are working out which time-limit bracket applies, the form at the foot of the page is the route to a structured first-pass assessment.