Discovery Assessments

Section 29 of the Taxes Management Act 1970 gives the HMRC the power to re-open a year of assessment and raise a discovery assessment.  Where one of two conditions are satisfied, the HMRC will have authority to assess additional tax resulting from tax return errors. The first condition is that the loss of tax was either careless or deliberate, and the second condition is that when HMRC’s tax return enquiry was closed, or the enquiry into the taxpayer’s return was completed, HMRC could not have been reasonably expected to be aware of the relevant loss of tax. There must be an incomplete disclosure which lead to a loss of tax, and the number of years HMRC can go back depends on the conduct of the taxpayer.

HMRC must also provide evidence to prove an incomplete disclosure or loss of tax. HMRC can also adopt the presumption of continuity; if they discover an issue that caused a loss of tax, they can presume the same under-declaration was likely to be made in previous years. It is then the responsibility of the taxpayer to show that there was no previous fault.

Bright Line Law is a barrister law firm led by Jonathan Fisher QC who has previously been involved in advising on the use of, and regulatory investigation of film industry, and offshore tax schemes. We have also been instructed to represent clients in criminal and civil litigation initiated by HMRC. Bright Line Law provides specialist advisory, advocacy, litigation, policy and strategic services. If you require specialist advice on tax, contact Jonathan Fisher QC directly at jf@brightlinelaw.co.uk or another member of our team or telephone us on + 44 (0)203 709 9470.

Jonathan Fisher QC
Lead Counsel

Email jf@brightlinelaw.co.uk
Telephone + 020 3872 2852

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