In Clive Beagles v HMRC [2018] UKUT 380 the Upper Tier tribunal confirmed that a discovery assessment may become 'stale' in circumstances when HMRC is aware of a potential insufficiency of tax yet delays in raising an appropriate assessment. 

  • Mr Beagles entered into a tax loss avoidance scheme designed by KPMG in 2002-03
  • By June 2004 HMRC became aware of the scheme and considered it did not work as intended.
  • Already out of time to raise an assessment out of normal enquiry time limits, HMRC discussed the case internally and decided to await the outcome of another case.
  • HMRC eventually raised a Discovery Assessment in 2008.

The taxpayer appealed to the FTT who found for HMRC on the basis that it had been resonable for HMRC wait for the outcome of another case before raising an assessment.

The taxpayer appealed to UT on the basis that the FTT had erred in law.

The UT accepted the taxpayers argument that a discovery must retain its “newness” when an assessment is made.

  • It found that HMRC believed that the loss scheme did not work from at least 1 August 2005.
  • Although at that time there was no case law suggesting that a discovery could go stale. The fact remains that it was not until two and a half years after August 2005 that the assessment was raised. 


With hindsight HMRC was quite simply ill equipped to deal with the sheer volume of the tax loss schemes engineered by large tax firms in the 'noughties and had to achieve some kind of balance. The fact remains that time limits are set in order to achive finality for both sides.

UPDATE: Permission has been granted for HMRC to appeal to the Court of Appeal.

Useful guides

Useful guides on this topic

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

DOTAS: Disclosure of Tax Avoidance Schemes
Rules for declaring use of tax schemes

Time Limits for Tax Assessments
What are the time limits for claiming a tax refund? How far back can HMRC go to raise an assessment?

External links

Clive Beagles v HMRC [2018] UKUT 380 

Clive Beagles v HMRC [2017] TC05925 .