The four-year cap applies to registered persons, who are not being fraudulent.
If today HMRC discover that a person should have registered, say, ten years ago, HMRC can register that person with effect from ten years ago and issue a first VAT return which covers all ten years. Because the return ended within the last four years, HMRC can assess all ten years under VATA 1994, s. 73(1) (VATA 1994, s. 77(1)(a)).
INTERESTING CASE LAW:
Rastegar (t/a Mo’s Restaurant)  TC 00733 commenced trading in December 1998 and instructed an accountant to deal with his tax obligations, but the accountant failed to notify HMRC of the liability to VAT register. Taxable turnover exceeded the registration limit at the end of April 1999, so he became liable to register by the end of May 1999. When HMRC learned that Rastegar was unregistered, they compulsorily registered him from 1 June 1999 and issued an assessment for underpaid VAT, based on the income tax returns.
First, Rastegar unsuccessfully claimed that HMRC knew, through the information in his income tax returns, that his turnover exceeded the VAT registration limit earlier than 9 February 2008, being one year before the issue of the assessment. However, the First-tier Tribunal decided that the assessment was not time-barred by VATA 1994, s. 73(6) as being made more than one year after evidence of facts, sufficient to justify the making of the assessment, came to HMRC's knowledge. The period of one year started when evidence of facts came to HMRC's knowledge. The crucial facts came to light when a tax return had been filed which suggested that the turnover exceeded the registration threshold and when HMRC were unable to trace a VAT registration. The tribunal decided that the last of those facts came to HMRC's knowledge no earlier than 15 February 2008, when HMRC established that Rastegar was not registered. On that basis, the assessment issued on 9 February 2009 was not out of time under s. 73(6).
Also, Rastegar unsuccessfully argued that the assessment is time-barred in respect of the part concerning periods that ended more than three years before it was issued, being the then three-year cap in VATA 1994, s. 77(1). The tribunal decided that, under s. 77(4), if VAT was lost in circumstances giving rise to a penalty under VATA 1994, former s. 67, including for failure to notify a liability to register, then a time limit of 20 years applied.
Hope this answers your questions.