In Yocheved Blum v HMRC [2017] TC6404 HMRC was able to make a discovery assessment in respect of PAYE income following a taxpayer’s error on her tax return there was nothing on the return to indicate that the taxpayer had picked off the wrong figures for her wages.

The taxpayer completed her self assessment tax return by taking the wrong figures: she worked out tax deducted from her payslips instead of her P60.

HMRC later made an assessment, this was out of Normal enquiry time limit, however under the Discovery provisions, an officer of HMRC could not have been reasonably expected, when the normal enquiry window (or enquiry) closed, to have been aware that there was an underdeclaration of tax.

The taxpayer appealed.

The First Tier Tribunal found that there was nothing on the taxpayer's return to alert HMRC to the fact that the taxpayer had made an error.

Although the taxpayer’s employer had submitted a correct P14 (this is the employer's version of the P60), HMRC does not make any automatic checking of P14s to tax returns and as result HMRC was able to make a late assessment.


Annoying for the taxpayer, who in turn should now know the difference between payslips and P60s. Although many of HMRC's PAYE improvements are 'on hold' pending Brexit, once HMRC has improved its systems it should be able to automatically pre-populate taxpayer’s returns with all their PAYE income. If automated pre-population works accurately the concept of a Discovery Assessment inrespect of PAYE income will (we hope) become a thing of the past.

Yocheved Blum v HMRC [2017] TC6404

Tax Time Limits
What are the time limits for claiming a tax refund? How far can HMRC go back and raise an assessment? How many years back can a taxpayer appeal? What are the time limits for correcting a tax return?

Discovery Assessment
“Discovery” is the power that allows HMRC to reopen closed periods where they believe there is an underpayment of tax, by means of issuing an assessment.

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