Commentary

A6.701 HMRC's discovery powers—introduction

Administration and compliance

A6.701 HMRC's discovery powers—introduction

Division A6.7     Discovery

For updates affecting this Division please see Part A0 Updates

A6.701 HMRC's discovery powers—introduction

One of the key tests of any advanced tax system is the way in which it balances the interest of the state with the interest of individual taxpayers. Discovery is one of those difficult balancing areas: to what extent should taxpayers have certainty over their tax affairs when this conflicts with the state being able to recover tax which would otherwise be due?

Deliberate understatement

It is likely to be generally accepted that if a person has put in a return which deliberately understates their income HMRC should have the power to investigate and assess any tax which has not been assessed. But equally there is likely to be agreement that there has be some time limit on HMRC's powers, if only for practical purposes, to assess tax for earlier years.

Say, for example, that 40 years ago someone keeping chickens and selling off the eggs which the family did not eat did not declare and pay tax on the profit on those sales. As

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