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HMRC internal manual

Enquiry Manual

Reopening Earlier Years: Discovery in SA Years: Operational Restrictions

Although any officer of HMRC can make an assessment, discovery assessments should be authorised by an officer of HO grade or above. If you want to make an extended time limits assessment, see EM3345.

Legally you can make a discovery assessment whilst the enquiry window is open so long as the tax loss was caused carelessly or deliberately. In practice you should not normally make a discovery assessment where

  • an SA return has been received and the enquiry window is open - instead open an enquiry
  • there is an open enquiry for the year of assessment - instead consider a jeopardy amendment
  • an SA return for the year of assessment has not been issued - issue a return
  • an SA return has been issued but has not been filed - instead make a determination under TMA70/S28C.

The use of a discovery assessment will normally be the correct course of action when

  • You have already made a determination and found it to be insufficient.
  • Both you and the taxpayer agree that discovery assessments should be made, or you have an accurate measure of an omission and making a discovery assessment is preferable to making a Section 9A enquiry. There are some examples at EM3268.

Each cases should however be considered on its own merits, for example, where the taxpayer is unlikely to file the returns, and/or there has been a failure to notify for a long period, it may be more effective to issue a discovery assessment, provided all the relevant conditions have been met, see EM3255.

Points to bear in mind

  • The deeming provision in TMA70/S12AC does not open an enquiry into the partner’s personal return. A discovery assessment can be made for non-partnership income if the enquiry window has closed.
  • You can make a discovery amendment to a partnership statement EM7100+ even though a partner has failed to file their individual SA return.
  • An amendment to a self assessment does not extend the enquiry window for the part of the self assessment that has not been amended. A discovery assessment can be made in respect of the non-amended part if the enquiry window has closed for that part.

You will need to make a discovery assessment where a return is submitted too late for a taxpayer to self assess. A failure by the taxpayer to submit a return until some time after the statutory filing date will normally be viewed as carelessness. That will certainly be the case where they are too late to make a SA return for the year in question. If a discovery is made in such circumstances you can make an assessment up to 6 years (20 years, if the taxpayer has failed to notify chargeability) after the end of the tax year in question EM3270.

In cases not covered by the above guidance you should seek advice from contact link if you consider a discovery assessment should be made in preference to using the normal SA returns and enquiry powers.