EM3269 - Discovery: alternative assessments

HMRC are able to make alternative assessments. There will be instances when you are unsure about which tax to charge when making an assessment. For example, you might be unsure whether a charge to tax should be income or capital gains.

HMRC cannot subject a taxpayer to two different charges to tax in respect of the same tax head but there is no objection to pursuing them both as alternatives.

In these circumstances, HMRC might decide to make alternative assessments. This method has long been accepted by the courts and is considered a sensible way of dealing with difficult cases. It is therefore established that there is nothing objectionable in principle of alternative assessments.

It is best practice to set out the various legal arguments in your explanation letter.

The taxpayer’s recourse would be to appeal both assessments and let the tribunal decide which is the correct position.