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HMRC internal manual

Enquiry Manual

Reopening Earlier Years: Discovery - Meaning and Interpretation


In Aramayo (6 TC 279) Bray J said:

it seems to me to be quite clear that the word “ discover “ cannot mean ascertain by legal evidence; it means, in my Opinion, simply comes to the conclusion “from the examination he makes, and, if he likes, from any information he receives.

This decision was quoted with approval in ex parte Hooper case (7 TC 59), the Lord Chief Justice saying

Mr. Justice Bray was of opinion that the words “ If the Surveyor discovers “ means if the Surveyor “comes to the conclusion from the examination he makes and from any information he may choose to receive”; Mr. Justice Avory thought that the word discovers in this section means “has reason to believe”; Mr. Justice Lush took the word as equivalent to finds” or “satisfies himself.”

See EM3311 to EM3313 for further cases concerning whether the officer had made a discovery.

TMA70/S29 enables an officer of HMRC to make an assessment in the amount, or the further amount, which ought in the officer’s opinion to be charged. Before SA, Section 29 enabled the officer to make an assessment “to the best of his judgment” - see EM3314.

You must have evidence for your discovery. It cannot be a mere suspicion. You can make a discovery assessment if it appears to you on the information you have that there has been a loss of tax. If the case goes to the tribunal, the onus is on the taxpayer to show, on the balance of probabilities, that the amount you have assessed is wrong.

Where HMRC might intend to allege that accountancy is carelessly or deliberately wrong, the case should be submitted to a compliance accountant before a decision letter is issued - see ARTG2190