Discovery
Assessments

You may have received it because HMRC has information that you have not accurately declared your income, tax has been under-assessed, and excessive relief has been awarded. You have undeclared offshore income, or you have sold property abroad.

HMRC officers may raise discovery assessments if one of the two following conditions applies:-

• HMRC has information that you have not accurately declared your income/gains or provided inadequate disclosures due to negligence or fraudulent behaviour.
• The officer completing an enquiry could not have reasonably been expected to have been aware of the loss of tax.

Before replying to the officer who has sent you the letter, you should speak to a specialist who will first seek to validate HMRC’s discovery assessment notice to ensure it complies with the tax laws and their right to exercise enquiry in the first place.

HMRC can either raise a Discovery Assessment:-

• 6 years from the filing date in cases of incomplete disclosure.
• 20 years from the filing date in cases of tax fraud.

Experienced professionals must handle Discovery Assessment due to the underlying risks of huge penalties or facing prosecution.

No. HMRC randomly selects a proportion of tax returns every year. In the first two years of self-assessment, some 15,000 returns were investigated. HMRC will write to you to let you know that your affairs are being investigated although it will not normally give the reason behind its decision to launch an enquiry. Under the self-assessment regime, the Revenue must start any enquiry within 12 months of the last filing date of 31 January but there is no requirement for an investigation to conclude within a fixed period of time.

If it is found that a tax payer has intentionally misled the tax authorities, punishment can be severe: prosecutions, jail sentences and stiff fines designed to recoup the unpaid tax and penalties.

In cases where minor amounts of income have been undeclared or where small mistakes have been made on the return, normally the matter can be cleared up with a few phone calls and submission of relevant pay slips. If the problem appears to be a simple one of omission, HMRC can ask the tax payer to answer specific questions or provide documents that might answer the question. If it is discovered that tax has been underpaid, the taxpayer will have to pay what is due plus any penalty or interest accrued. Where serious fraud (amounts of more than £50,000) is concerned, HMRC can start to request information from banks, accountants and other parties if it is the tax inspector’s “reasonable opinion” that this will help the investigation.

With over 50 years of combined experience in the industry, dns accountants can help reduce the chances of HMRC investigation.This is just by ensuring accurate and timely submissions, maintaining necessary digital record keeping and ensuring you remain compliant at all times.

Call dns with your enquiry to put your mind at rest and speak with our tax expert today.

Yes, but taxpayers’ affairs are confidential and information will only be disclosed to people that the individual agrees it may be given to, such as dns or another adviser. But, HMRC can ask former employers, customers, suppliers or colleagues for information relating to its investigation

Yes, of course, but you may have to go back through the whole accounts’ years (legally you must keep six years), and to collate this and submit it all is quite a job if you are still trying to run a company.

Yes, if you have subscribed to our Tax Investigation Service we will look after searching, collating, submitting all the documents requested and required. We will liaise with the tax authorities on your behalf and help you every step of the way. You will also have access to a legal helpline to make your tax investigation work easy.

There is an article on our blog. Or you can visit the HMRC website for more detailed information.