Discovery assessments—sufficient disclosure of information

The following Tax practice note provides comprehensive and up to date legal information covering:

  • Discovery assessments—sufficient disclosure of information
  • The sufficient disclosure test
  • Should HMRC have been aware of the under-assessment?
  • Langham v Veltema—how much information is sufficient?
  • HMRC guidance on Langham v Veltema—Statement of Practice 1 (2006)
  • Valuations
  • Exceptional items in accounts
  • Taking a different view from HMRC
  • Excessive amounts of information
  • Meaning of available information
  • More...

Discovery assessments—sufficient disclosure of information

A discovery assessment is an assessment to tax (or more tax) by HMRC where it discovers that too little tax has been assessed for a past year or accounting period. HMRC will typically make a discovery assessment if it is too late to open an enquiry into the relevant tax return.

This Practice Note is about one specific aspect of the rules on discovery assessments, namely that in some circumstances, HMRC can only issue a discovery assessment if at a particular time, it did not have enough information to be aware of the potential loss of tax.

For an explanation of:

  1. HMRC's power to open an enquiry, and the relevant time limits in which it may do so

  2. the meaning of HMRC making a 'discovery' (of a potential loss of tax)

  3. the taxpayer's ability to avoid a discovery assessment if the return was prepared in accordance with prevailing practice, and

  4. the time limits for making discovery assessments

see Practice Note: HMRC compliance checks, enquiries and discovery assessments.

This Practice Note is about discovery assessments in relation to income tax, capital gains tax and corporation tax. Similar provisions appear in the equivalent rules for stamp duty land tax (SDLT), and these are discussed in Practice Note: SDLT—administration and compliance. Cases that have considered the SDLT version of these rules have referred to the direct tax

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