Enquiries into tax returns: time limits for discovery assessments

Depending on circumstances, HMRC can raise an enquiry up to 20 years after a return is filed

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Under section 9A of TMA 1970, HMRC holds the right to make formal ‘enquiry’ into every tax return submitted to them. The time limit for commencing an enquiry is 12 months after the day on which the return is carried out.  

To organise their work within HMRC, they have historically referred to ‘full enquiries’ covering the return as a whole, and ‘aspect enquiries’ dealing with one or more matter(s).

The legislation does not, however, distinguish between different types of enquiry, therefore all enquiries into tax returns are legally enquiries into the full return, even if in practice HMRC only checks part of the return.

If HMRC identifies risks that relate to other taxes or duties, they might liaise with the relevant compliance officers responsible for that tax or duty. If they open a compliance check to address these risks, they usually work their enquiry in conjunction with them.

If HMRC makes no enquiries within the period allowed, or if they have completed an enquiry, the return becomes final unless

  • the taxpayer is still within time to amend their return, or
  • the taxpayer has carelessly or deliberately caused a loss of tax, or
  • HMRC discovered that the return was incorrect, and the taxpayer had not disclosed enough information, HMRC can then make a discovery assessment.

The legislation that gives the power to HMRC to make a discovery assessment is section 29 Tax Management Act (TMA) 1970.


HMRC cannot generally raise a discovery assessment if the taxpayer has filed a tax return unless HMRC has evidence to suggest that there is a loss of tax due to careless or deliberate errors (s 29(4)).

A discovery assessment can only be raised if

  1. There is an incorrect or incomplete return due to fraudulent or negligent conduct that resulted in:
    - income or gains which have not been assessed, or
    - a tax assessment which has become insufficient, or
    - excessive relief having been given.
  2. The notice to enquiry window under s9A (12 months from the filing date) has passed but, based on the information provided in the tax return, an HMRC officer could not have been expected to realise that the return was incomplete or incorrect.

The only requirement appears to be that if a ‘new’ HMRC officer, acting honestly and reasonably, arrives at the conclusion that there was an insufficiency in an assessment of tax, a discovery assessment can be raised to recover the tax lost. Such a view of the provisions (of a hypothetical ‘new’ HMRC officer) is almost undefeatable and follows the Court of Appeal’s judgement in Langham v Veltema (2004).

In theory, discovery can be avoided by including suitable disclosures and making available all the relevant information in either the return and/or the ‘white space’.

‘Made available’

Information is treated as having been made available to the officer if:

  • it is contained in the tax return for the relevant period (or the two preceding periods) or in any of the accounts, statements or documents supplied with the tax return, or
  • it is contained in any claim made for the relevant period (or the two preceding periods), or in any of the accounts, statements or documents supplied with the claim, or
  • it is contained in any documents, accounts or particulars supplied in connection with an enquiry into a tax return or claim, or
  • it is information which could reasonably be expected to be inferred from any of the above, or
  • it is information that was notified to the officer in writing by the taxpayer.

So, a change of opinion on information that has previously been made available to HMRC is not grounds for a discovery.

There is clearly an onus on the taxpayer to draw HMRC’s attention to any important information relevant to a tax liability, particularly if there is some doubt as to the interpretation that can be placed on that information. It is not sufficient just to provide that information if it is hidden away or obscure.

Time limits 

Section 34(1)

In any case of incomplete disclosure without careless or deliberate conduct, the time limit for a discovery assessment is not later than four years after the end of the tax year to which it relates.

Section 36(1) and (1A)

In any case involving a loss of tax brought about carelessly, the time limit for making a discovery assessment is not later than six years after the end of the tax year to which the assessment relates.

The time limit for making a discovery assessment is not later than 20 years after the end of the tax year to which it relates where the loss of tax is:

  • brought about deliberately by the person
  • attributable to a failure to notify liability under section 7 of TMA 1970, or
  • attributable to a tax avoidance scheme which is a notifiable arrangement or a listed or hallmarked scheme and the user of the scheme failed to disclose details to HMRC at the proper time.

ACCA members are required to ensure that they observe their obligations in respect of their clients’ errors. Further guidance can be found at Professional Conduct in Relation to Taxation.