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HMRC internal manual

Enquiry Manual

Reopening Earlier Years: Discovery in Pre-SA Years: Conditions - Cenlon and Olin

The guidance below applies to income tax and CGT assessments for pre-SA periods only.

In the cases of Cenlon Finance Co Ltd v Ellwood (40TC176) and Scorer v Olin Energy Systems Ltd (58TC592) the Courts considered whether a TMA70/S54 agreement could restrict the Inspector’s power to raise a discovery assessment and, if so, in what circumstances.

The decision in Cenlon was that where an assessment had been determined on appeal, the effect of TMA70/S46 (2) was to preclude a discovery assessment in respect of a particular point which had been specifically dealt with and agreed in the course of the determination of that appeal.

Guidance was given in the Olin case on deciding whether (in the absence of express words making the position clear) a particular point had been agreed, or could be said to have been agreed, in the course of reaching overall agreement on a person’s tax liability for a particular period. Effectively, it was recognised that there could be a specific agreement not only where an explicit agreement exists but also where an implicit agreement can be inferred.