Finance Act 2022

Discovery assessment

18 (1) If an officer of Revenue and Customs discovers—

(a) that a person who ought to have been assessed to tax has not been assessed to tax,

(b) that an assessment to tax is or has become insufficient, or

(c) that any relief from tax which has been given is or has become excessive,

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

(2) Where a person has made and delivered a return under paragraph 8 or 9 a discovery assessment may not be made in respect of the tax to which the return relates unless condition A or B is met.

(3) Condition A is that the situation mentioned in sub-paragraph (1) was brought about carelessly or deliberately by the person or a person acting on that person’s behalf.

(4) Condition B is that at the time when an officer of Revenue and Customs—

(a) ceased to be entitled to give a notice of enquiry to the person, or

(b) in a case where a notice of enquiry was given in relation to the return, issued a closure notice,

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

(5) For the purposes of sub-paragraph (4), information is made available to an officer of Revenue and Customs if—

(a) it is contained in the person’s return under paragraph 8 or 9, or in any accounts, statements or documents accompanying the return;

(b) it is contained in any claim made under this Schedule by the person, or in any accounts, statements or documents accompanying any such claim;

(c) it is contained in any documents, accounts or particulars which, for the purposes of any enquiries into the return or any such claim by an officer of Revenue and Customs, are produced or furnished by the person to the officer;

(d) it is information the existence of which, and the relevance of which as regards the situation mentioned in sub-paragraph (1)—

(i) could reasonably be expected to be inferred by an officer of Revenue and Customs from information falling within paragraphs (a) to (c), or

(ii) are notified in writing by the person to an officer of Revenue and Customs.

(6) An objection to the making of an assessment under this paragraph on the ground that neither condition A nor B is fulfilled may only be made on an appeal against the assessment.

(7) Where an amount of tax is assessed under this paragraph, that amount is payable on the day after the end of the 14 day period beginning with the day on which the notice of assessment is issued.