Glossary · UK

What is Discovery Assessment?

An HMRC assessment raised outside the normal enquiry window when HMRC discovers previously undeclared income or gains, with time limits of 4, 6, or 20 years.

Full Definition

HMRC normally must open a formal enquiry into a tax return within 12 months of it being filed. Section 29 of the Taxes Management Act 1970 allows HMRC to issue a discovery assessment outside this window if new information comes to light. The time limits are: 4 years after the tax year end for ordinary mistakes; 6 years for careless errors; and 20 years for deliberate or fraudulent non-disclosure. A discovery must be genuine -- HMRC cannot simply revisit information already provided on the return. Common triggers include information from third parties (employers, banks, land registry), or data-matching exercises. The taxpayer can appeal a discovery assessment to the First-tier Tax Tribunal.