We get many questions on whether HM Revenue & Customs (HMRC) can use Section 29 TMA 1970 (Discovery) to open an enquiry when apparently they are already out of time.
An HMRC Discovery Assessment can be opened when HMRC believe they have received additional information that wasn’t available previously when the tax return was submitted.
We have seen a few recent cases where HMRC were opening a Discovery Assessment where the client had failed to submit a P60 declaring their employment income and tax deducted (from a previous employer) from a few years ago.
We have argued that when the employer submitted their Real Time Information, they would have declared the pay to the ex-employee so HMRC had the information within a few months of the tax year ending. HMRC hadn’t “discovered” the P60 information, it had been sent to HMRC at the correct time and had been held by HMRC for a number of years. Therefore, HMRC were out of time to raise a Section 9A enquiry and Section 29 didn’t apply.
HMRC have responded that the information wasn’t with the tax return when it was submitted, therefore the information was discovered which does appear to be incorrect but HMRC won’t budge from this decision.
As many practices are starting to receive client information for the current tax returns, a simple check of employment income or an additional question on the client documentation may save a lot of time and effort and stress on the client.
Ray McMahan, Vantage Fee Protect Claims Consultant
September 2017
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