HMRC can investigate a person’s tax position if there are grounds for making a discovery assessment where it discovers that too little tax has been assessed for a past year or accounting period.

For a year or period for which a taxpayer has submitted a tax return, a discovery assessment can only be made if:

  • The potential loss of tax was due to careless or deliberate behaviour by the taxpayer or their agent or
  • At the time when the enquiry time limits expired, HMRC could not reasonably have been expected, on the basis of the information available at that time, to be aware of the potential loss of tax