A6.709 Discovery—careless or deliberate behaviour
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.
The second protection mentioned at A6.707 is that HMRC can raise a discovery assessment (regardless of the s 29(5) test — see A6.710) if the loss of tax is brought about carelessly or deliberately by the taxpayer or a person acting on his behalf. Or to put it the other way — if the taxpayer has not been careless HMRC cannot issue an assessment unless it can show that that s 29(5) does not protect the taxpayer.
It is found in TMA 1970, s 29(3)–(4):
'(3) Where the taxpayer has made and delivered a return under section 8 or 8A of this Act in respect of the relevant year of assessment, he shall not be assessed under subsection (1) above—
(a) in respect of the year of assessment mentioned in that subsection; and
(b) in the same capacity as that in which he made and delivered the return,
unless one of the two conditions mentioned below is fulfilled.
(4) The first condition is that the situation mentioned in subsection (1) above was brought about carelessly or deliberately by the taxpayer or a person acting on his behalf…'
For this condition to apply the taxpayer must have delivered a return.
'A person acting on his behalf'
Before exploring careless and deliberate behaviour it is worth considering the reference to 'a person acting