EM3231 - Discovery: making a discovery - whether there is a discovery: who makes it

A discovery is made where an officer of HMRC reaches a conclusion that

• there is tax which ought to have been assessed but has not been assessed, or
• an assessment is or has become insufficient, or
• any relief that has been given is or has become excessive

A discovery must be more than mere suspicion. The officer must have a reasonable belief that an insufficiency exists.

There do not need to be any new facts or information for a discovery to be made. All that is required is that the officer newly reaches a conclusion that a loss of tax exists. This includes a situation where the officer comes to a new conclusion or changes their opinion.

A discovery must be made by an individual officer. A discovery cannot be made by ‘HMRC’ or by a ‘team’ within HMRC.

The Supreme Court determined in HMRC v Tooth [2021] UKSC 17 that there is no principle of collective knowledge within HMRC. This means that one officer’s knowledge cannot be deemed to be imparted on another officer.

Further, the Supreme Court determined that an officer can make the same discovery as another officer, with that counting as a new discovery for that particular officer.

S29(1) TMA1970

Para 41 Sch 18 FA1998