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HMRC internal manual

Enquiry Manual

Reopening Earlier Years: Discovery in SA Years: Conditions





FA98/SCH18/PARA 42(1)

FA98/SCH18/PARA 43

FA98/SCH18/PARA 44

FA98/SCH18/PARA 45

You can issue a discovery assessment when one of the following two conditions have been met

1.  The further tax that is due arises from the careless or deliberate behaviour of the taxpayer or a person acting on his or her behalf, see EM5125 and EM5130, or

2.  The officer could not have been reasonably expected, on the basis of the information made available to him or her, to be aware of the under-assessment when the enquiry window closed or a completion notice was issued, see EM3260.

If the taxpayer considers that neither condition applies, his objections can only be dealt with by an appeal against the assessment.

A discovery assessment may not be made where a taxpayer has made a return and

  • the return was made in accordance with prevailing practice but at a later date (after the expiry of the time limit for opening an enquiry) HMRC changes its practice in relation to the treatment of some particular item and it is realised that there has been a loss of tax, or
  • the enquiry window has closed for the return/amendment, or a closure notice of an enquiry into the return/amendment has been issued and the information enabling the discovery to be made was `made available’ to HMRC before the window closed or the enquiry closed. This means that a change of opinion on information that has previously been made available to HMRC, see EM3260, will not be grounds for a discovery, (the second condition above). This does not apply where the taxpayer has carelessly or deliberately caused a loss of tax and the condition in TMA70/S29(4) is fulfilled (the first condition above).

In addition to these legislative restrictions, there are other occasions on which you should not make a discovery assessment, see EM3265.