UT (Tax & Chancery) UT/2023/000096 - [2024] UKUT 00203 (TCC)

Section 29 Taxes Management Act 1970 (“TMA 1970”) sets out the basis on which HMRC may make a discovery assessment.

Section 29(1) provides that if an officer of the Board discovers that any income which ought to have been assessed to income tax has not been assessed, that an assessment to tax is or has become insufficient or that any relief which has been given is or has become excessive, the officer may make an assessment. Section 29(3) provides that if an officer makes a discovery and the taxpayer has made and delivered a return for that year of assessment, one of two conditions must be satisfied for HMRC to make a discovery assessment for that year. These alternative conditions are set out in s29(4) and 29(5).

The ordinary time limit for the issue of a discovery assessment is four years after the end of the tax year to which the assessment relates (s34 TMA 1970). In a case where the relevant loss of tax has been brought about deliberately by the taxpayer, that time limit is extended to 20 years. The extended time limit is set out in s36(1A) TMA 1970:

Section 118(7) TMA 1970 provides: