Overview of the legislation—individuals, partnerships and companies
For the latest New Development, see ND.2074.
The discovery legislation is as follows:
• individuals, trustees and personal representatives: TMA 1970, s 29
• partnerships: TMA 1970, s 30B
• companies: FA 1998, Sch 18, Pt V, paras 41–45
The legislation is essentially the same for all the categories of taxpayer, with only minor changes reflecting particular nuances of partnership and company taxation.
This commentary refers only to the legislation as it applies to individuals, but unless otherwise stated, it can be assumed that it will also apply to trustees, personal representatives, partnerships and companies. Particular points relating to partnerships and companies can be found at A6.715 and A6.716 respectively.
Conditions to be met for the discovery assessment to be valid
The discovery provisions are set out in TMA 1970, s 29. There are a number of conditions that must be met for the discovery assessment to be valid.
Firstly, the HMRC officer must 'discover' in relation to a tax year that1:
(a) the taxpayer has income or gains that should have been taxed that have not been (see also 'Application of the discovery legislation to stand-alone income tax charges' below)
(b) the taxpayer has a tax assessment that is or has become insufficient, or
(c) that any relief given to the taxpayer has been given is or has become excessive
Note that the first condition above will be amended by Finance Bill 2022 with retrospective effect to ensure that stand-alone income tax charges are
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