In William Richie & Hazel Richie v HMRC [2019] UKUT 0071 the Upper Tribunal found that HMRC was not entitled to make a discovery assessment outside of normal time limits as it had not actually established carelessness.

The case concerned CGT Private Residence relief and a Discovery Assessment made in respect of the sale land.

The taxpayers had relied on the advice of their accountant, Mr Weir, who in turn had relied on the advice of Mr Wilson, an ex-inspector of taxes.

Although the conditions for discovery were met HMRC also needed to establish that there was careless by the taxpayer or their adviser so that it could extend the discovery time limit from four to six years.

Before the FTT HMRC had argued that Mr Weir was careless.

The taxpayers appealed to the UT that the issue of carelessness had not been fully considered during the cross examination of witnesses.

The UT agreed.

It concluded that it would be unfair to remit the case back to the FTT and recall the witnesses and it allowed the appeal.


'The devil', as they say, 'is in the detail'. It might seem strange that the basic conditions for an extended discovery were not tested by the FTT however, this case was very long on detail and the PRR claim was the matter that occupied both parties.

HMRC had also lodged an appeal against the FTT decision, this was as to whether PRR had been properly decided by the FTT. This was not heard as the decision on carelessness meant that the assessment was out of time.

Our guides

CGT: Private Residence Relief
CGT relief on disposal of your main residence

Garden: selling and developing CGT and income tax
Avoid tax pitfalls with this handy guide

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

External links

William Richie & Hazel Richie v HMRC [2019] UKUT 0071 UKUT 0071

FTT decision: Mr William & Mrs Hazel Ritchie [2017] TC05911