In Gareth Clark v HMRC [2017] TC5856 the First Tier Tax Tribunal (FTT) extended the scope of discovery assessments. The case concerned a pensions unauthorised payment charge. The decision was confirmed by the Court of Appeal in February 2020.

  • The taxpayer’s SIPP transferred funds into other schemes.
  • HMRC raised a Discovery Assessment on the basis that a transfer was not into a registered pension schemes and an Unauthorised Payment Charge was due. No tax was due as a result of the initial issue.
  • HMRC subsequently found that a different transfer was in fact an unauthorised payment and that the amount of tax due was the same, by coincidence as that assessed the first time round. HMRC did not raise a new assessment for the ensuing unauthorised payment charge.
  • The taxpayer appealed.

The FTT held that:

  • An appeal against a discovery assessment does not open a general roving enquiry into the tax position of the appellant, i.e. a discovery assessment could only be raised on a specific issue and HMRC could not use it as an excuse for a fishing trip.
  • However, the same constraints did not apply to the FTT,  ‘The public interest in taxpayers paying the right amount of tax is as strong as, if not stronger or at least more evident than, it has ever been, and the duty of the Tribunal remains to determine whether the assessment  undercharges or overcharges the appellant.
  • It confirmed that the original assessment remained valid for the second issue.


The full judgment makes a number of interesting statements about how a discovery assessment should work. 

It seems that the FTT’s final conclusion defeats the points they made.  Even if an appeal against discovery does not create a “general roving enquiry”, allowing such a treatment to succeed at tribunal in the name of “the right amount of tax” does. 

The one limitation the FTT imposed is that nothing specifically prohibited from discovery by s29 can be assessed.

With over £1 million of unauthorised payments charge plus an unauthorised payments surcharge this case was appealed. The Court of Appeal confirming that the unathorised payment charge was valid.

Useful topical guides and links

Unauthorised payment charge
How, when and why a charge arises

How to appeal a decision of HMRC
Key steps in appealing a decision of HMRC.

How to appeal a tax penalty
Essential reading in cases were there are penalties too

Discovery assessment and time limits
How far HMRC can go back, what conditions must be met for a valid discovery

Penalties: Error in a return or document
How work out penalties for different forms of inaccuracies

External Links

G Clark v HMRC [2017] TC05856 

Tower MCashback LLP1 v HMRC  [2011] UKSC 19 and [2008] EWHC 2387 (Ch) were cited in the judgment


Do you like our content and want to know more? Sign up now * for Nichola's FREE SME tax news, tips and topical more

*There are no strings attached: you will be free to unsubscribe at any time. We don't pass on anyone's details to anyone else and as you can see we don't blur our content with annoying adverts.