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HMRC internal manual

Company Taxation Manual

Corporation Tax self-assessment (CTSA): Assessments: Discovery - restrictions on the power to make

FA98/SCH18/PARA42 - 45

There are restrictions on making discovery assessments. You can only make a discovery assessment for an accounting period for which a company has delivered a company tax return if Paragraphs 43 or 44 apply as below.

1.  Paragraph 43 states that when a company has delivered a company tax return you can make a discovery assessment if the underassessment or excessive relief was brought about by the careless or deliberate behaviour of:

  • the company,
  • a person acting on behalf of the company, or
  • a person who was a partner of the company at the relevant time.

2.  Paragraph 44 states that you can make a discovery assessment for an accounting period for which the company has delivered a company tax return when you:

  • are out of time for opening an enquiry into the return, or
  • have completed your enquiries into the return,

and you could not have been reasonably expected to be aware of the matters discovered (see CTM95030 and CTM95040) on the basis of information made available to you, before that time:

  • as part of the company tax return, or
  • in related documents.

3.  Paragraph 42 (2) removes both of these restrictions when you make a discovery assessment that only gives effect to a discovery determination made in relation to an amount stated in another company’s tax return.

4.  Paragraph 42(2A) also removes both of these restrictions in respect of any income or chargeable gains in relation to which the company has been given a notice, after enquiries have been completed into the return, under section:

  • 184G or 184H of TCGA92 (avoidance involving capital losses)
  • 81(2) TIOPA10 (schemes and arrangements designed to increase relief)
  • 232 or 249 TIOPA10 (avoidance involving tax arbitrage)