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HMRC internal manual

Claimant Compliance Manual

Discovery Decisions: General Approach

S20(4) allows us to revise a S18 or 19 decision where there are reasonable grounds for believing that the previous decision is not correct and this is attributable to fraud or neglect - see CCM13100. S20(4) can also be used to revise a previous S20 decision.

A discovery enquiry may be opened as part of a full enquiry under S19 (see CCM13204) or in its own right (see CCM13206). However, S20 does not contain any formal information powers to allow you to issue a formal notice to obtain information or evidence.

Although you will not normally begin a discovery enquiry by making a discovery decision you must have sufficient evidence at the time you open the enquiry on which to base such a decision if the claimant does not reply to your enquiry - see CCM13250. You may have to base your decision on your best judgement but this cannot be a speculative decision. If you are unsure whether or not you have sufficient evidence you should ask yourself whether, without any further information, could you defend a decision before an appeal tribunal.

Example 1

On 1 November 2011 an informers letter is received advising you that the claimant has understated her income for 2009/2010. It is too late to open a S19 enquiry. There are no additional sources of income shown on HMRC’s records so you will not be able to open a discovery enquiry. The claimant might have understated her income but you have no reasonable grounds for believing the award to be incorrect and you could not defend a revised decision at that point. You cannot open a speculative discovery enquiry.

Example 2

A discrepancy enquiry for 2010/2011 was settled on 1 September 2011. On 4 October 2011 contact was made with the claimant’s childcare provider as part of the childcare provider checks. The provider advised us that the claimant’s children were only in her care until August 2010. You cannot open another S19 enquiry but you can open a discovery enquiry because you have reasonable grounds for believing the award is incorrect. If necessary you could amend the award at that point to exclude childcare costs from August 2010. In practice what you would do is write to the claimant asking for details of her childcare costs. It might be the children moved to another childcare provider for exactly the same costs and the award is therefore correct but the possibility of this outcome does not mean you cannot open a discovery enquiry at the outset.

Example 3

A discrepancy enquiry for 2009/2010 was settled on 1 September 2010. On 2 July 2011 an informer’s letter is received advising you that the single claimant has been living with a partner since 2008. A check by the CCRO produces some evidence that another adult is shown at that address from late 2010. Although it is possible that the claimant had a partner in 2009/2010 you cannot open a discovery enquiry because you do not have reasonable grounds for believing the award is incorrect. The partner might not have been there in 2009/2010 or even if another adult was living at the property they might not have been living together as husband and wife. You should therefore open an enquiry for 2010/2011 or an examination for 2011/2012 once the S17 notice has been returned.