EM3213 - Discovery: legislation and time limits: legislation - CT discovery assessments and determinations: - Paragraph 41 to 45, Schedule 18 FA 1998

Legislation

Para 41(1) Sch 18 FA 1998 - If an officer of Revenue and Customs discovers as regards an accounting period of a company that–

  • (a) an amount which ought to have been assessed to tax has not been assessed, or
  • (b) an assessment to tax is or has become insufficient, or
  • (c) relief has been given which is or has become excessive,

the officer may make an assessment (a “discovery assessment”) in the amount or further amount which ought in their opinion to be charged in order to make good to the Crown the loss of tax.

Para 41(2) Sch 18 FA 1998 - If an officer of Revenue and Customs discovers that a company tax return delivered by a company for an accounting period incorrectly states–

  • (a) an amount that affects, or may affect, the tax payable by that company for another accounting period, or
  • (b) an amount that affects, or may affect, the tax liability of another company,

the officer may make a determination (a “discovery determination”) of the amount which in their opinion ought to have been stated in the return.

Para 42(1) Sch 18 FA 1998 - The power to make–

  • (a) a discovery assessment for an accounting period for which the company has delivered a company tax return, or
  • (b) a discovery determination,

is only exercisable in the circumstances specified in paragraph 43 or 44 and subject to paragraph 45 below.

Para 42(2) Sch 18 FA 1998 - Those restrictions do not apply to an assessment or determination which only gives effect to a discovery determination duly made with respect to an amount stated in another company’s company tax return.

Para 42(2A) Sch 18 FA 1998 - Those restrictions, other than the restriction in paragraph 45, do not apply so far as regards any income or chargeable gains of the company in relation to which the company has been given, a notice within sub-paragraph (4) after any enquiries have been completed into the return (so far as relating to the matters to which the notice relates).

Para 42(3) Sch 18 FA 1998 - Any objection to a discovery assessment or determination on the ground that those paragraphs have not been complied with can only be made on an appeal against the assessment or determination.

Para 42(4) Sch 18 FA 1998 - A notice is within this sub-paragraph if it is–

  • (a) a notice under section 184G or 184H of the Taxation of Chargeable Gains Act 1992 (avoidance involving capital losses), or
  • (b) a notice under section 81(2) of TIOPA 2010 (schemes and arrangements designed to increase relief),
  • (c) [omitted by FA 2016, s. 66 and Sch. 10, para. 4.]

Para 43 Sch 18 FA 1998 - A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if the situation mentioned in paragraph 41(1) or (2) was brought about carelessly or deliberately by–

  • (a) the company, or
  • (b) a person acting on behalf of the company, or
  • (c) a person who was a partner of the company at the relevant time.

Para 44(1) Sch 18 FA 1998 - A discovery assessment for an accounting period for which the company has delivered a company tax return, or a discovery determination, may be made if at the time when an officer of Revenue and Customs–

  • (a) ceased to be entitled to give a notice of enquiry into the return, or
  • (b) in a case where a notice of enquiry into the return was given–
  • (i) issued a partial closure notice as regards a matter to which the situation mentioned in paragraph 41(1) or (2) relates, or
  • (ii) if no such partial closure notice was issued, issued a final closure notice,

the officer could not have been reasonably expected, on the basis of the information made available to them before that time, to be aware of the situation mentioned in paragraph 41(1) or (2).

Para 44(2) Sch 18 FA 1998 - For this purpose information is regarded as made available to an officer of Revenue and Customs if–

  • (a) it is contained in a relevant return by the company or in documents accompanying any such return, or
  • (b) it is contained in a relevant claim made by the company or in any accounts, statements or documents accompanying any such claim, or
  • (c) it is contained in any documents, accounts or information produced or provided by the company to an officer of Revenue and Customs for the purposes of an enquiry into any such return or claim, or
  • (d) it is information the existence of which, and the relevance of which as regards the situation mentioned in paragraph 41(1) or (2)–
  • (i) could reasonably be expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (c) above, or
  • (ii) are notified in writing to an officer of Revenue and Customs by the company or a person acting on its behalf.

Para 44(3) Sch 18 FA 1998 - In sub-paragraph (2)–

“relevant return” means the company’s company tax return for the period in question or either of the two immediately preceding accounting periods, and

“relevant claim” means a claim made by or on behalf of the company as regards the period in question or an application under section 751A of the Taxes Act 1988 made by or on behalf of the company which affects the company’s tax return for the period in question.

Para 45 Sch 18 FA 1998 - No discovery assessment for an accounting period for which the company has delivered a company tax return, or discovery determination, may be made if–

  • (a) the situation mentioned in paragraph 41(1) or (2) is attributable to a mistake in the return as to the basis on which the company’s liability ought to have been computed, and
  • (b) the return was in fact made on the basis or in accordance with the practice generally prevailing at the time when it was made.