Ian Lawrence
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Why are HMRC raising discovery assessments?

Why are HMRC raising discovery assessments?

Two of my clients have received discovery assessments in the last week for their 2012/13 personal tax returns.

I am planning on writing to HMRC asking them how they can raise these assessments given that they had all the information (as far as I can tell) at the time of the tax return submission (which as during 2013)

Does that seem  reasonable way forward?

I am concerned that the HMRC guidance says:

"Unless the loss of tax has been brought about carelessly or deliberately, if the information "discovered" was already in the officer's possession when the self assessment became final, HMRC have no right to make a discovery."

So if the return had been completed but one of the figures from the P60 had been omitted or transposed, say, would this be "careless" and enable HMRC to make a discovery assessment?

Thank you


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19th Feb 2016 17:18

Quite simply yes
Yes... It would

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19th Feb 2016 17:27

Having information

If the information on the return was incorrect, then HMRC would not have had all the information in their possession.

The obvious counter-argument is that HMRC would have had the P60 submission from the employer, and hence had the information. Unfortunately, under the law as it stands, information from a third party (the employer in this case) is not taken into account in the discovery provisions.

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23rd Feb 2016 12:19

I argue date HMRC received P60 is the date HMRC received info

stepurhan wrote:

Unfortunately, under the law as it stands, information from a third party (the employer in this case) is not taken into account in the discovery provisions.

But how did HMRC "discover" that the tax return was incorrect? By using the P60 information supplied by the employer. So if HMRC made the discovery from information supplied by the employer and that information could easily be cross referenced to the taxpayer (correct NINO) then I feel the date HMRC became aware of the information is the date the employer submitted it to HMRC. I have argued this successfully with HMRC in the past. HMRC have always initially rejected my argument but I have always eventually won.  

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19th Feb 2016 19:11

I think that most practitioners are going to see an increase in these sorts of discoveries over time, as the HMRC Connect system starts joining up data sources that were not previously subject to cross-domain searches. As stepurhan says, information from 3rd parties is not classed as information that HMRC has, even if HMRC has it, so as they start to cross-connect those large and disparate databases of information from all sorts of sources, more will come out in the wash.

I suspect that in many cases it will just be simple forgetfulness on the part of a taxpayer - some forgotten and perhaps minimal source of income - but HMRC will want to justify the time and money spent on Connect and so may well pursue the pennies as well as the pounds.

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19th Feb 2016 19:28

Digital accounts

Under the digital accounts proposal, so that where HMRC have information it will prepopulate the 'return' or whatever the equivalent will be HMRC will have to admit that they have the income and would not be able to make a discovery any longer... surely?

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23rd Feb 2016 12:25


If you have filled the return in wrong and they compare it to the P60....what do you expect


All you can say is, as the accountant I made a mistake it wasn't the clients negligence and with a bit of luck no fines.... just interest.

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23rd Feb 2016 14:07

That was a big "if" in Ian's question

Unless HMRC have already indicated that it was the P60 which gave rise to the query, how does Ian know what the 'discovery' was.


  If clients have not completed their SA returns correctly, then the clients will have to incur further costs in dealing with the enquiries. If the enquiries prove to have been founded on an error by HMRC, the clients can seek reimbursement of these wasted costs.- no guarantee of success !

On the narrow question posed by Ian, have a look at http://www.hmrc.gov.uk/manuals/emmanual/em3255.htm to see what prior knowledge' by HMRC means.

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23rd Feb 2016 13:10

Flip side

I have been known to ask clients, in these sort of circumstances, whether they would have been happy to leave the tax as originally calculated if their error had resulted in an overpayment of tax which had only now been discovered. Of course, if it was the accountant's error, that's a bit different as they will have relied on what they were told they had to pay and may have spent the money.


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