At a glance

If they discover a past under assessment that results in a loss of tax, HMRC have the power to re-open a past year of assessment and raise a Discovery Assessment.

  • There must be an incomplete disclosure leading to a loss of tax of some kind.
  • The number of years after the end of the tax year that HMRC may go back to depends on the underlying conduct of the taxpayer at the time.
  • No discovery is possible without evidence: the onus is on HMRC to prove an incomplete disclosure or loss of tax.
  • In theory, a future discovery can be avoided by including suitable disclosures on a Return: 
    • The disclosure must clearly state that HMRC could take a different view of the transaction, e.g. indicating that a valuation has been used or, explicitly stating that HMRC may have a different view of the legislation, or disclosing a scheme under DOTAS.
    • This is measured by considering whether a hypothetical HMRC officer has been given enough information to raise an enquiry and follows the Court of Appeal’s judgement in the 2004 Veltema case
  • The normal rules evidence may be turned on their head if HMRC is able adopt the Presumption of continuity: if HMRC finds anything that has caused a loss of tax during an enquiry and it is able to take the view that the same under-declaration was most likely to be made in previous years also, it is then presumed that the same loss of tax will arise year on year. It is then up to the taxpayer to show that there was no continuity of the fault.

Time limit (years)




Incomplete disclosure

Not due to careless or deliberate conduct


A loss of tax

Due to careless conduct


A loss of tax

  • Due to a deliberate action, or
  • A failure to notify liability, or
  • Attributable to a notifiable tax avoidance scheme (DOTAS), a hallmarked scheme or listed scheme, and

The user failed to notify HMRC


Taxpayers are also restricted as to the number of years that they may go back to seek relief from an overpayment after making an error or mistake in a return, see Overpayment relief.

Overview, case law and legislation

See Discovery Assessments (subscriber guide)


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