How HMRC can make a Discovery

The tax authorities are entitled to look at and ask questions on any tax return within an enquiry window which normally ends 12 months after the tax return was filed with them. But they can also do this outside that window, by making what is termed a discovery, if they can show that all relevant information was not supplied to them with the tax return so they had no way of knowing that all might not be well.

As your tax adviser we always take care to disclose additional information with the tax return where we feel that protects you from a later discovery, but until now HMRC have things very much their way on this. A recent tax case, however, looks like it has changed that. The case is Dr Michael Charlton and Others v HMRC and we will try to use it to your advantage if you ever face the threat of HMRC making a discovery in respect of an old tax return.