A6.705 Timing of a discovery—can a discovery become stale?
A key issue in discovery cases is how soon HMRC must raise the discovery assessment after an officer has made the discovery. To discover something implies an element of newness, so the question is how long does HMRC have before the discovery become old or stale – or indeed, is there a requirement for HMRC to act promptly at all? This was not an issue which was discussed in any depth in many of the historic cases but it has been an important consideration in judgements made since 2008.
Note that the commentary below refers only to the legislation as it applies to individuals, but unless otherwise stated, it can be assumed that it also applies to partnerships and companies.
As a preliminary point it is important to note that a discovery can only be made once. In Tooth1 the Upper Tribunal explained the position thus (paragraph 79):
'... the same officer (or officers) cannot make the same discovery twice. We see no reason, however, why the same officer cannot, for different reasons, discover that one of the situations set out in section 29(1)(a), (b) or (c) pertains a second time
Suppose an officer discovers that an assessment to tax has become insufficient for a certain reason, but HMRC decides not to issue an assessment because the point is controversial and the amount small. Suppose that officer then – for different reasons – discovers that the assessment has become insufficient. We consider that