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HMRC internal manual

Claimant Compliance Manual

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HM Revenue & Customs
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Discovery Decisions: S20(1) Decision - Reasonable grounds for believing

 

You can only make a S20(1) decision where you have reasonable grounds for believing that a conclusive decision was incorrect. “Reasonable grounds” is not defined in the statute. You should assume that wherever a person’s income tax liability is revised, and that revision would have an effect on the entitlement to tax credits for the year, you have reasonable grounds for making a discovery decision under S20(1). Note that if the revisions to the income tax liability would not have an effect on the entitlement to tax credits, you would not have reasonable grounds for making a discovery decision. In most cases if there would be no adjustment to the tax credits there will be no need to make a further decision.

However, you might also now have other concerns about the case. Where the revision of the income tax liability would not have an effect on the entitlement to tax credits, you will not be able to make a discovery decision for the year unless you have reasonable grounds for believing that the conclusive decision was incorrect because of the fraud or neglect of the person, or either of the persons. So if you have some information to suggest that the entitlement for that year may have been wrong, but

  • any revisions to the income tax liability do not have consequences for the entitlement to tax credits, and
  • you do not have reasonable grounds for believing there has been fraud or neglect

you will not be able to make a discovery decision to revise the award for that year even if you believe, as a result of that information, that the conclusive decision on the entitlement for the year may have been incorrect.