Mark McLaughlin looks at whether the concept of ‘staleness’ in HMRC discoveries is capable of being resurrected.
The facility for a discovery assessment to be issued to an individual outside the normal time limit of four years is a key weapon in HMRC’s armoury of powers.
HMRC commonly uses its discovery powers to issue extended time limit assessments, if (among other things) the taxpayer has undeclared income or capital gains, or if HMRC considers that a self-assessment return for a ‘closed’ tax year understates the taxpayer’s liability.
In such circumstances, HMRC can make discovery assessments if the tax under-assessed, etc., is attributable to:
- Careless or deliberate conduct of the taxpayer (or a person acting on his behalf); or
- Something of which the HMRC officer could not have been reasonably expected to be aware when the enquiry window closed (or a closure notice was given in an enquiry) based on the information available to them before that time (TMA 1970, s 29(4), (5)).
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