The Tax Break Podcast | Tooth v HMRC: what now for discovery assessments in tax investigations?

Published on 19th May 2021

Listen to the latest episode of the Tax Break podcast, where Veronica McMahon and Matthew Greene discuss what's next for discovery assessments in tax investigations.

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The latest in our series of tax podcasts focuses on an important recent Supreme Court decision (Raymond Tooth v HMRC) and what it means for discovery assessments in direct tax. Discovery assessments are issued by HMRC inspectors to charge individuals and companies for lost tax. They have generated a huge volume of caselaw and the latest case looked at:

  1. What constitutes a deliberate inaccuracy by the taxpayer? This matters because a deliberate loss of tax gives HMRC much longer to raise a discovery assessment. Broadly, the Supreme Court decided that only an intention to mislead counts and where an inaccurate entry is explained elsewhere in the document (a so called white space disclosure), there won't have been a deliberate inaccuracy.
  2. Can a discovery assessment become stale if HMRC don't act quickly enough? The Supreme Court held not: despite a recent trend in the cases supporting this type of argument, the Supreme Court decided that, provided the statutory time limits are complied with, there is no additional requirement to act promptly.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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