EM3258 - Discovery: issuing discovery assessments: notification to taxpayer
Where an officer makes an assessment for the purposes of making good a loss of tax/NIC, it is best practice to issue an explanation letter at the same time, see ARTG2190. Details of what to include in the letter are explained below.
SAM20061 explains the procedure for issuing the assessment.
Explanation letter
In the explanation letter the officer should
- explain the reasons why they are making the assessment. This should include a statement to say that they have concluded that there is a loss of tax
- explain what discovery was made and when, see EM3252
- tell the taxpayer about their right to appeal against the assessment and, if they wish, ask for a review of HMRC’s decision and apply for postponement of the tax charged by the assessment.
The letter should also explain under which legislation the assessment is being issued, for example section 29 TMA 1970.
If the officer is making an extended time limits assessment, the explanation letter should also include
- an explanation of why the officer considers that they can use extended time limits - the rules for extended time limits are at CH53100 for assessments made after 31 March 2010,
- a reminder that interest will be charged when tax is paid late,
if HMRC are considering, or intend to charge, penalties, the officer should also include a copy of factsheet CC/FS9 if they have not previously sent one and explain in the letter that CC/FS9 tells the person about their rights when HMRC are considering penalties.