MTT55340 - Administration: Compliance: Discovery assessments and HMRC determinations: Time limits for discovery assessments

When considering the time limit for making a discovery assessment, there is no link between any compliance check period and the period of assessment. The link is with the date on which HMRC is making the assessment and the accounting period.

HMRC can make a discovery assessment within:

  • 4 years of the end of the accounting period in which the loss of tax arises, in general cases
  • 6 years of the end of the accounting period in which the loss of tax arises, where the loss of tax is due to careless behaviour by a member of the group (or a person acting on behalf of a member of the group),
  • 20 years of the end of the accounting period in which the loss of tax arises, where the loss of tax is due to deliberate behaviour by a member of the group (or a person acting on their behalf).

Where the loss of tax results from a filing member failing to meet its obligation to register with HMRC (see MTT51400), a discovery assessment may be made within 20 years of the end of the accounting period in which the loss of tax arises.

This is set out in paragraph 29, schedule 14 to Finance (No.2) Act 2023.

Example 1

Group A submits its self-assessment return (through its filing member) for the period ending 31 December 2024. After the compliance check window has closed, new information becomes available to HMRC indicating that the amount of MTT assessed should have been greater. A discovery assessment is appropriate as the new information shows a loss of tax for the period.

The discovery assessment for this period can be made by 31 December 2028 if the error was not due to careless or deliberate behaviour (4 years), 31 December 2030 if due to careless behaviour of a relevant person (6 years) or 31 December 2044 if due to deliberate behaviour of a relevant person (20 years).

Example 2

Group B submits a below threshold notification (through its filing member) for the period ending 31 December 2038. Subsequently, new information becomes available to HMRC showing that the group was a qualifying group for the period. The below threshold notification was invalid and a self-assessment return should have been submitted. A discovery assessment is appropriate as the new information shows a loss of tax for the period.

The discovery assessment for this period can be made by 31 December 2042 if the error was not due to careless or deliberate behaviour (4 years), 31 December 2044 if due to careless behaviour of a relevant person (6 years) or 31 December 2058 if due to deliberate behaviour of a relevant person (20 years).

Discovery assessments could also be issued for any other accounting periods for which a self-assessment return was not submitted due to the submission of the below-threshold notification, subject to the above time limits.