A6.708 Discovery—prevailing practice
The discovery provisions allow an HMRC officer to make an assessment to recover a loss of tax where certain conditions are met1. A discovery assessment is often used if the time limit to open an enquiry into the matter has passed. For details of the conditions, see A6.703.
The commentary below discusses the restriction that prevents HMRC from issuing a discovery assessment when the tax return was filed on the basis of the prevailing practice at that time.
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. For specific commentary on discovery for partnerships and companies, see A6.715 and A6.716 respectively.
Prevailing practice protection from discovery assessment
The HMRC officer cannot raise a discovery assessment in relation to matter that has been reported on a tax return if the position taken in the return was in accordance with the prevailing practice at that time. In order to for individuals, trustees and personal representatives benefit from this protection, the taxpayer must have submitted a tax return in