Enquiry out of time

Thanks Martin
Yes the original return identified the figures as provisional.
I don't really have a problem resubmitting copies of correspondence providing the repair.
I guess my concern is whether a resulting discovery assessment can be resisted.
I do not think that the discovery provisions (yet) extend the powers of HMRC to raise late assessments where through their own incompetence they fail to raise an enquiry within the normal enquiry window having been provided timeously with the full facts.

Obviously we may end up in an argument over whether the information was ever "supplied" as a question of fact.

HMRC was making noises about the discovery provisions when requesting the copies, but I am not at all sure that the discovery provisions are even relevant. Client self-assessed the correct liability, on time, so it may be that HMRC have no time limit to physically process it.

not sure...
...what angle you are approaching this one from, Clint.

I do all I can to minimise my clients' tax liabilities. Legally.

There can always be areas of grey given the mess of a ridiculous tax system that has been created over the years. But how is what you describe grey?

Prima facie, you and the client are aware that (i) HMRC has not processed valid tax return information (ii) no-one (your client, you or HMRC) is able to prove beyond doubt why that is the case. Probably because it has gone astray - but whether this is caused by HMRC is not clear to anyone (iii) your client knows he has underpaid taxes by £3k and seemingly wishes that state of affairs to continue?

Are you not close to conspiring to defraud if you do not submit the (apparently reasonable?) request for missing information? On the grounds that the return which was indisputedly received and processed is provisional, is known to be incorrect, and has never been corrected to the final self-assessed figures?

On the info available from the posting I could readily construct an argument on behalf of HMRC as to why they are entitled to the info at this juncture. I'm not sure I can construct any sustainable argument on behalf of you and your client as to why you are entitled to withold it.

p.s. you would need to consult any regs and guidance of your professional body if applicable.

p.p.s......
thinking again about specific phrases used in your posting, Clint.

(i) the original filing was "provisional figures". Did the return say so? Or was it silent on the matter
(ii) a "repair" was subsequently filed - this implies I think that the original return was not self-declared to be based on provisional figures?
(iii) HMRC has actually asked for a copy of the "repair". So it is a fact they know (now at least) that a repair was prepared. When and how do they know this?
(iv) "HMRC has expressed an opinion that the tax return was wrong". Interesting choice of words. It's an agreed position that the original tax return was wrong as a matter of fact. For reasons that may or may not have been disclosed at the time. It's an agreed position that a subsequent repair was not processed.

Albeit, I don't think any amplification to the above would actually change your situation much.

As my view is that you get no choice in the matter, then on the second part of your question (what should be the approach)
(a) tell client HMRC is on the case,
(b) that he should have a cheque ready for the tax and interest (3 1/2 years of it) ,
(c) bat for 0% penalties on grounds that you can demonstrate a repair was voluntarily submitted at the earliest opportunity once the error in the original return came to light - assuming that to be the case. "Provisional figures" and not disclosing they were provisional is not the most helpful aspect of that stance, but you know the details and will need act accordingly
(d) don a tin hat and prepare for grief from both HMRC and the client. HMRC - "you have hardly been forthcoming" - they might even quote your own prof body rules and regs at you if applicable. Client - "you never made it clear I had to pay after all this time ; you haven't mentioned it for the last 3 years so of course I thought it was all done and dusted"

Thanks again
As to whether it is GPO or HMRC at fault for the paperwork going astray, I agree that this is a matter of some speculation. I will just say that losses of this nature appear to be disproportionately regular in the case of items sent to HMRC contrasted with other addressees.

Whatever the client's culpability, I think that HMRC cannot avoid some of the blame. The return was marked originally as provisional. A provisional return should be repaired by the anniversary of the filing date. If HMRC cannot trace a repair/correction as that date approaches, then whatever the cause of that omission, they are on notice that something is not right and I understood that they had a responsibility to open an enquiry under those circumstances within their normal enquiry window. I have always found that to be a bit odd, with the enquiry window coinciding with the repair window. If I had been designing the system I would have given HMRC a few weeks grace to raise an enquiry after the closure of the repair window.

I agree.....
......as I too am not sure "discovery" is the point at issue either. But we both know that not all HMRC officers are very clued up on the law unfortunately.

But the "wider picture" is relatively clear. You and the client both have certain knowledge that self-assessed tax has not been paid. It would be difficult territory to not cooperate with HMRC under those circumstances (and what would that do to any future argument about penalties?), even if you could demonstrate with 100% certainty that this state of affairs came about partly as a result of HMRC incompetence.
And it can only be, at best, partly (rather than wholly) HMRC's fault ; your client is partly culpable, as he knows he has tax to pay, and has declined to do so.
And of course HMRC may presumably (and not unreasonably) take the position that they are not to blame at all. They have no record of receiving any update to the provisional return. It got lost in the post rather than at HMRC offices. They can be criticised for being slow in chasing - but you/your client could be equally criticised for being slow in letting the situation go uncorrected.

On the "narrower picture", if a return with self-admitted provisonal/estimated figures was originally submitted, I think the filing of the return is not finalised until the corrections are submitted? I'm not sure it's a "repair" at all? But either way, it does not seem to involve "discovery" other than discovering that the correct info has not been processed! Which HMRC is claiming is news to them (albeit not news to your client).