In David Wilby v HMRC [2022] TC08589, the First Tier Tribunal (FTT) ruled that a robust HMRC process was sufficient to render a discovery assessment valid following the identification of discrepancies between a Stamp Duty Land Tax (SDLT) return and Land Registry forms.

  • Mr Wilby acquired a residential property from a Mr and Mrs Murphy (the vendor).
  • Form TR1 confirmed the vendor received £542k from the purchaser.
  • The SDLT return reported the consideration for the purchase as £120k and no SDLT was due as a result.
  • HMRC identified the discrepancy and raised a Discovery Assessment.
  • Mr Wilby Appealed the assessment.
  • Following an unsuccessful Statutory Review, Mr Wilby appealed to the Tribunal.

The FTT found that:

  • The tightly controlled procedure which HMRC outlined showed that the raising of the discovery assessment under appeal had been raised by an officer.
  • It was not however necessary to identify the specific officer who had made the discovery.
  • The procedures outlined by HMRC highlighted the discrepancies between the TR1 and the SDLT return and an officer viewing the discrepancy constituted a discovery.
  • The officer's belief that there was a loss of tax was reasonably formed as:
    • There was an unexplained difference in the property returns which could have resulted in a loss of tax.
    • That the taxpayer’s accountant was involved in promoting SDLT schemes was a suitable indicator of a loss of tax.
  • HMRC met their burden of proof in demonstrating all of the requirements for a discovery assessment were met as:
    • At the time the enquiry window closed, HMRC could not have reasonably been expected to be aware of the loss of tax.
    • The SDLT return, itself, could not have alerted HMRC to that loss of tax.
    • There was no evidence that HMRC received information from the Land Registry prior to the enquiry window closing.
    • There was no evidence that the discrepancy was a mistake.
    • The assessment was made within the statutory time limit, four years of the effective date of the transaction.
    • The assessment procedure was followed.

The appeal was dismissed.

Useful guides on this topic
Discovery Assessment (subscriber)
When can HMRC issue an assessment outside of the normal statutory time limits? What conditions must be met? What are your rights of appeal and defences?

Discovery Assessments: At a glance (Freeview)
What is a Discovery Assessment? When can HMRC make a Discovery? What are the time limits for Discovery Assessment?

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

How to Appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

David Wilby v HMRC [2022] TC08589

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