Discovery Assessments: When HMRC Can Reopen Your Tax And How To Challenge It

You filed your tax return. The deadline passed. You assumed that was the end of it—and then, perhaps years later, a letter arrives from HMRC. It says you owe additional tax for a year you thought was settled. The letter references "section 29" and carries a figure that includes interest stretching back to the original due date.

This is a discovery assessment. It's one of HMRC's most powerful tools, and it can feel alarming—especially when it appears out of nowhere. But discovery assessments are subject to strict legal conditions, and HMRC doesn't always get them right. This guide explains what a discovery assessment is, when HMRC can and cannot make one, and the five grounds you can use to challenge it.

If you're looking for the broader picture of how HMRC investigates tax returns, see our guide to HMRC enquiries and closure notices. Discovery assessments are a separate power that operates after the enquiry window has closed.

What Is A Discovery Assessment?

A discovery assessment is an assessment to additional tax made under section 29 of the Taxes Management Act 1970. It allows an HMRC officer to assess you to tax they believe you should have paid but didn't—even after the normal 12-month window for opening an enquiry has closed.

Under s.29(1), HMRC can make a discovery assessment when an officer "discovers" one of three things:

1. Tax that should have been assessed but wasn't—for example, income you didn't include on your return
2. An existing assessment that is insufficient—you reported the income, but the resulting tax calculation was too low
3. Relief that has been given but was excessive—you claimed a deduction or allowance you weren't entitled to

The scope of the first gateway was tested all the way to the Court of Appeal in HMRC v Wilkes [2022] EWCA Civ 1612, which held that "income" in s.29(1)(a) means income—not any charge to income tax. HICBC and similar step-7 stand-alone charges fell outside the gateway entirely. Parliament closed the gap retrospectively in FA 2022 s.97, but a narrow savings provision keeps the Wilkes defence alive for taxpayers who had already raised it by 30 June 2021. See our Wilkes v HMRC case analysis for the full diagnostic and the four buckets of taxpayer.

The word "discover" has a broad meaning in this context. It doesn't require new information. As the courts have put it, a discovery happens whenever it has "newly appeared" to an officer that there is an insufficiency—whether from fresh evidence, a change of view, or simply a correction of an earlier oversight (Charlton v HMRC [2012] UKUT 770 (TCC) at paragraph 37).

How A Discovery Assessment Differs From An Enquiry

An enquiry under section 9A TMA 1970 is a formal investigation opened within 12 months of your filing date. HMRC sends you a notice of enquiry, asks questions, requests documents, and eventually issues a closure notice with their conclusions.

A discovery assessment skips all of that. There is no investigation phase. HMRC simply forms the view that you have underpaid tax and issues the assessment. You receive the assessment first and challenge it afterwards—by appeal.

This matters because you don't get the opportunity to provide information or correct misunderstandings before the assessment is raised. The safeguard for you is the right of appeal: you appeal to HMRC first, and can then take your appeal to the tribunal, where HMRC must prove the assessment was validly made.

What The Letter Looks Like

A discovery assessment typically arrives as a formal notice of assessment, stating the tax year, the amount, and the statutory basis (section 29 TMA 1970). It may be accompanied by an explanatory letter setting out what HMRC discovered and which legal condition they're relying on—though this explanatory letter is best practice rather than a legal requirement.

When you receive one, check two things immediately:

• Does it reference "section 29"? This confirms it's a discovery assessment rather than some other type of HMRC letter.
• Is it signed by a named individual officer? This matters. HMRC's own guidance (EM3231) states that "a discovery must be made by an individual officer" and "cannot be made by 'HMRC' or by a 'team' within HMRC." In one First-tier Tribunal case, Brown v HMRC [2024] UKFTT 245 (TC), the tribunal discharged a discovery assessment that was signed by "HICBC Team, HM Revenue and Customs" rather than by an individual officer. That decision is not binding on other tribunals, but it illustrates the risk HMRC runs when no individual officer is identified. A team-signed letter may be a sign that HMRC has not followed the correct procedure.

When HMRC Can (And Cannot) Make One

The power to make a discovery assessment is not unlimited. Where you have filed a self-assessment return for the relevant tax year, HMRC can only raise a discovery assessment if at least one of two conditions is met (s.29(3)). If neither condition is satisfied, the assessment is invalid—regardless of whether you actually owe the tax.

If you did not file a return at all, the two conditions do not apply. HMRC can proceed directly under s.29(1), subject only to the time limits. This is not a loophole in your favour—failing to file removes a layer of protection that return-filers have.

The First Condition: Carelessness Or Deliberate Behaviour (s.29(4))

The first condition is that the insufficiency was "brought about carelessly or deliberately" by you, or by someone acting on your behalf.

"Carelessly" means failing to take reasonable care in preparing your return (s.118(5) TMA 1970). "Deliberately" means something more serious—after the Supreme Court's decision in HMRC v Tooth [2021] UKSC 17, it requires an intention to mislead HMRC as to the truth of the relevant statement.

The burden of proving carelessness or deliberate behaviour falls on HMRC, not on you. If HMRC cannot demonstrate that you (or your agent) were careless or deliberate, this condition is not met.

The Second Condition: The Awareness Test (s.29(5))

The second condition is that, at the time the enquiry window closed (or, if HMRC opened an enquiry, when they issued the closure notice dealing with the point), an HMRC officer "could not have been reasonably expected, on the basis of the information made available to him before that time, to be aware of" the insufficiency.

In plain English: HMRC is saying they couldn't have spotted the problem from what you gave them. If the information in your return made the insufficiency apparent, this condition fails—and if the first condition also fails, the assessment is invalid.

This is the most important defence for many unrepresented appellants. If you filed your return honestly and included the relevant information, HMRC may not be able to satisfy this condition.

What Counts As "Information Made Available" (s.29(6))

Section 29(6) sets out an exhaustive list of what counts as information "made available" to an officer. The Court of Appeal confirmed in Langham v Veltema [2004] EWCA Civ 193 that this list is closed—only these categories count:

• Your return itself—all boxes, supplementary pages, white-space notes. Your returns for the two previous tax years count too, as do the partnership returns for all three years if you're in a business partnership (s.29(7))
• Documents accompanying your return—accounts, statements, schedules
• Claims and their accompanying documents
• Documents produced during any enquiry
• Information that could reasonably be inferred from any of the above (s.29(6)(d)(i))
• Information you notified in writing to an HMRC officer (s.29(6)(d)(ii))

Crucially, information HMRC held from other sources does not count. P11D forms from your employer, third-party data, HMRC's own databases, and information known to other HMRC officers or departments—none of this is "information made available" under s.29(6). Even if the answer was sitting in another part of HMRC's systems, it doesn't count unless it came from you.

The test is applied to a hypothetical officer with "such level of knowledge and understanding that would reasonably be expected in an officer considering the particular information provided by the taxpayer" (Charlton at paragraph 65). This is not a test of what an average officer would do—it asks what could reasonably be expected given the quality and content of the information you provided.

Time Limits

Discovery assessments cannot be made indefinitely. The time limit depends on your behaviour—or more precisely, on the behaviour HMRC alleges and can prove.

The time limits run from the end of the tax year, not from the date you filed your return. Take the 2021/22 tax year, which ended on 5 April 2022: a limit of 4 years ran out on 5 April 2026, while one of 6 years runs to 5 April 2028, 12 years to 5 April 2034 and 20 years to 5 April 2042.

A Worked Example

Suppose HMRC issues a discovery assessment for the 2019/20 tax year on 1 June 2024. The standard four-year limit expired on 5 April 2024—so the assessment is out of time unless HMRC can prove a longer time limit applies. To use the six-year limit, HMRC must prove you were careless. To use the twenty-year limit, they must prove you were deliberate, that you failed to notify HMRC you were chargeable, or that you did not report an avoidance scheme you used. If HMRC cannot prove the behaviour they allege, the assessment falls.

This is exactly what happened in Danapal v HMRC [2023] UKUT 86 (TCC). The Upper Tribunal overturned discovery assessments because HMRC had not proved that the taxpayer's accountant acted deliberately or even carelessly. Because the time limits depended on proving the behaviour classification, the assessments were simply out of time.

Agent Liability

One important warning: under s.36(1B) TMA 1970, references to losses brought about by you include losses caused by someone acting on your behalf. If your accountant or tax agent was careless or deliberate, that behaviour can be attributed to you for the purpose of extending the time limits. You may have done nothing wrong personally, but your agent's conduct could expose you to an assessment reaching back 6 years or even 20 years.

Five Grounds To Challenge A Discovery Assessment

If you receive a discovery assessment, you have the right to appeal. Here are the five main grounds on which you can challenge it—and the order matters. You should challenge the validity of the assessment before disputing the amount.

1. Was There Actually A "Discovery"?

A valid discovery assessment requires an individual HMRC officer to have genuinely believed there was an insufficiency in your tax. This involves two tests (Anderson v HMRC [2018] UKUT 159 (TCC)):

• Subjective: Did the officer actually believe there was an insufficiency? An honest belief is required—mere suspicion is not enough.
• Objective: Was it reasonable for an officer to hold that belief on the available information?

The practical point: check whether the assessment was made by an identifiable, named officer. In Brown v HMRC [2024], a First-tier Tribunal found HMRC had failed to prove the assessment was validly made because no individual officer was identified—the letter was signed by a "team." Brown is a first-instance decision and not binding on other tribunals, but it illustrates the argument. If your assessment letter does not identify a specific officer, this may be a procedural weakness worth raising.

2. Did HMRC Already Have The Information? (The Awareness Defence)

This is the s.29(5) defence—the most important ground for many appellants. If your return clearly disclosed the relevant information, HMRC may not be able to show that an officer "could not have been reasonably expected" to be aware of the insufficiency.

The defence is strongest when:

• Your return clearly disclosed the relevant income, gain, or claim
• You included white-space notes or attached documents explaining your position
• The insufficiency would have been apparent to an officer reading your return with reasonable knowledge

The defence is weakest when:

• Your return was ambiguous or incomplete
• The relevant information was buried or unclear
• Spotting the insufficiency would have required specialist investigation beyond the return itself

Remember: only information from you counts. You cannot point to HMRC's own databases, P11D forms from your employer, or third-party data to show that an officer should have spotted the problem under s.29(5)—only what you provided in or alongside your return (Langham v Veltema).

If you used a disclosed tax avoidance scheme and put its scheme reference number (SRN) on your return, our Charlton v HMRC analysis explains when that brings the promoter's description of the scheme into the test, and why the SRN alone is not enough.

3. Is The Assessment Out Of Time?

Check the behaviour classification HMRC is relying on and calculate whether the time limit has expired:

1. Identify the tax year the assessment relates to
2. Note when that tax year ended (5 April)
3. Check which time limit HMRC is claiming—4 years, 6 years, 12 years, or 20 years
4. Calculate whether the assessment was issued before that limit expired
5. If HMRC needs an extended time limit, ask: can they actually prove carelessness or deliberate behaviour?

The burden of proving the behaviour that justifies a longer time limit falls on HMRC (Danapal). If they can't prove it, the standard limit of 4 years applies, unless the case involves an offshore matter, or a failure to notify or to report an avoidance scheme without a reasonable excuse (see the table above).

The Upper Tribunal recently confirmed in HMRC v Harte [2026] UKUT 112 (TCC) that each distinct insufficiency must be justified separately. Deliberate conduct in relation to one item of undisclosed income does not automatically validate the assessment across all items. HMRC must demonstrate the basis for each specific insufficiency independently.

4. Did Your Return Follow Prevailing Practice?

Under s.29(2) TMA 1970, you cannot be assessed under s.29 if your return was "made on the basis or in accordance with the practice generally prevailing at the time when it was made"—provided the insufficiency is attributable to an error in how your liability was computed.

This is a niche defence, but it can apply where HMRC's published guidance later changed. If you followed what HMRC was telling taxpayers to do at the time you filed, and HMRC has since changed its position, this defence may protect you. The burden is on you to demonstrate what the prevailing practice was.

5. Is The Amount Correct?

Even if the assessment is valid, you can challenge the amount. Has HMRC calculated the additional tax correctly? Have they applied the right tax rates? Have they accounted for reliefs, allowances, or deductions you're entitled to?

But be aware: on the question of amount, the burden of proof shifts to you under s.50(6) TMA 1970. If you can't show the assessment is excessive, it stands. This is why challenging validity first is so important—if HMRC can't prove the assessment was validly made, the amount becomes irrelevant.

The Split Burden Of Proof

Discovery assessment appeals involve a split burden of proof, and understanding this is essential to building your case:

• Validity (was HMRC entitled to make the assessment?): The burden is on HMRC. They must prove that the conditions in s.29(3)-(5) are satisfied, and that the assessment is within the applicable time limit. This was confirmed by the Upper Tribunal in Burgess & Brimheath Developments Ltd v HMRC [2015] UKUT 578 (TCC) at paragraphs 38 and 53—even if your notice of appeal doesn't specifically challenge validity, the tribunal must still consider whether HMRC has proved the conditions are met.

• Quantum (is the amount right?): The burden is on you. Under s.50(6), if you can't demonstrate that the assessment is excessive, the assessment stands.

The practical consequence: always challenge validity first. If HMRC cannot prove the assessment was validly made—because they can't satisfy the s.29(3)-(5) conditions or because it's out of time—the amount doesn't matter and the assessment must be discharged.

Interest And Penalties

A discovery assessment doesn't just carry additional tax. Interest runs from the original due date for that tax year—typically 31 January following the end of the tax year—not from the date of the discovery assessment (FA 2009, s.101). For a discovery assessment covering the 2018/19 tax year issued in 2025, interest runs from 31 January 2020, so it has been running for around five to six years by the time the assessment arrives, and it keeps running until you pay. Each period is charged at the rate in force at the time; the rate today is 7.75% (base rate + 4% since 6 April 2025). The interest alone can be a substantial sum.

For the full picture on how interest works, see our guide to interest on unpaid tax.

HMRC may also issue inaccuracy penalties under Schedule 24 of the Finance Act 2007 alongside or shortly after the discovery assessment. The penalty depends on the behaviour classification—careless, deliberate, or deliberate and concealed—and can range from 0% to 100% of the additional tax. A penalty is a separate decision, and appealing the assessment does not appeal it: write to HMRC within 30 days of the date of the penalty notice, saying that you appeal and why. See our guide to HMRC penalties explained for how these are calculated and how to challenge them.

What To Do When You Receive One

If a discovery assessment arrives, here is a step-by-step approach:

Step 1: Check the letter. Confirm it references section 29 TMA 1970. Note whether it's signed by a named individual officer or by a team. Keep the letter and any accompanying documents—you'll need them if you appeal.

Step 2: Identify the tax year. The assessment will specify which tax year it relates to. This is your starting point for checking time limits.

Step 3: Calculate the time limit. Work out when the relevant tax year ended (5 April), then count forward: 4 years for the standard limit, 6 years if HMRC alleges carelessness, 12 years if the lost tax involves an offshore matter, and 20 years if they allege deliberate behaviour or a failure to notify. Is the assessment within time?

Step 4: Check the behaviour classification. If HMRC is relying on a time limit longer than 4 years, they must be alleging carelessness or worse, unless the lost tax involves an offshore matter or you failed to notify HMRC that you were chargeable (or to report an avoidance scheme). Do you agree with that classification? If not, this is a ground of challenge—HMRC bears the burden of proving the behaviour. A failure to notify does not count if you had a reasonable excuse and put things right without unreasonable delay once the excuse ended, though in practice you will need to show the excuse.

Step 5: Review your original return. Retrieve a copy of the return you filed for that tax year (you can request this from HMRC or access it through your Personal Tax Account). Check what information you provided. Did your return disclose the relevant income or claim? Did you include white-space notes or attach documents? This is the foundation of the awareness defence.

Step 6: Decide your response. You have 30 days from the date of the assessment to:

• Accept it—if you agree you owe the tax, pay the amount (including interest) and the matter closes
• Appeal to HMRC—your first appeal goes to HMRC, not the tribunal. Write to the officer who issued the assessment, saying that you appeal and why. You cannot take a discovery assessment straight to the tribunal

Once you have appealed, you can ask for an HMRC internal review (a different HMRC officer takes a fresh look, free of charge, normally within 45 days), HMRC may offer you one, or you can notify your appeal to the First-tier Tribunal (Tax Chamber) yourself. There is no tribunal fee (£0), and the tribunal will consider both the validity of the assessment and the amount.

If HMRC reply with their view and an offer of a review, you have 30 days from the date of that letter to accept the review or to notify your appeal to the tribunal. If you do neither, HMRC's view is treated as an agreement that settles your appeal. After that, HMRC's guidance says they must still accept a late request for a review if you had a reasonable excuse and asked without unreasonable delay once it ended (ARTG4300); otherwise you can go to the tribunal only with its permission. After a review, you have 30 days from the date of the review conclusion letter to go to the tribunal.

If you miss the 30 days deadline, write to HMRC first and ask them to accept a late appeal. Explain your reasonable excuse, and that you acted without unreasonable delay once it ended. Only if HMRC refuse do you ask the tribunal for permission—which is not guaranteed.

Appealing doesn't stop the tax being due. To put off paying the amount you dispute, apply to HMRC in writing under section 55 TMA 1970 within 30 days of the date of the assessment, saying how much you think you've been overcharged and why; you can do this in your appeal letter. If HMRC refuse, you can refer your application to the tribunal within 30 days of their decision. Interest still runs from the original due date on any tax you turn out to owe: see postponing payment during an appeal.

The key principle: challenge validity before quantum. If HMRC cannot prove the assessment was validly made, the amount is irrelevant. Focus your grounds of appeal on whether the s.29 conditions were met and whether the assessment was within time. Only address the amount as a secondary argument.

For help structuring your grounds of appeal, see our guide to writing grounds of appeal.

Key Legislation And Resources

Legislation

• Section 29 TMA 1970—discovery assessments
• Section 34 TMA 1970—ordinary time limit (4 years)
• Section 36 TMA 1970—extended time limits (6 years and 20 years)
• Section 36A TMA 1970—offshore time limit (12 years)
• Section 50(6) TMA 1970—burden of proof on quantum
• Schedule 24 FA 2007—inaccuracy penalties

Key Cases

• Langham v Veltema [2004] EWCA Civ 193—the awareness test; s.29(6) is exhaustive; only taxpayer-provided information counts
• HMRC v Tooth [2021] UKSC 17—discovery does not go stale; deliberate = intent to mislead
• Charlton v HMRC [2012] UKUT 770 (TCC)—the hypothetical officer standard; see our analysis
• Anderson v HMRC [2018] UKUT 159 (TCC)—subjective and objective tests for a valid discovery
• Burgess v HMRC [2015] UKUT 578 (TCC)—burden of proof on validity lies with HMRC
• Danapal v HMRC [2023] UKUT 86 (TCC)—assessments overturned for failure to prove behaviour
• Brown v HMRC [2024] UKFTT 245 (TC)—team-signed assessment discharged (FTT, illustrative only); individual officer required
• Hankinson v HMRC [2011] EWCA Civ 1566—conditions are objective questions of fact

HMRC Guidance

• Enquiry Manual EM3202—discovery overview
• Enquiry Manual EM3231—individual officer requirement
• Enquiry Manual EM3252—making versus notifying assessments

Related Guides On This Site

• HMRC enquiries and closure notices—the enquiry process that precedes or parallels discovery
• Understanding your HMRC appeal rights—your options after receiving an appealable decision
• How to appeal to the tax tribunal—step-by-step filing guide
• Writing grounds of appeal—structuring your case
• HMRC internal review—the statutory review option
• Interest on unpaid tax—how backdated interest is calculated
• HMRC penalties explained—penalty types and calculations
• Tooth v HMRC—case analysis on deliberate inaccuracy and discovery
• High Income Child Benefit Charge—HICBC discovery assessments are among the most common
• Late appeal to the tax tribunal—what to do if you miss the deadline

This article is for informational purposes only and does not constitute legal or tax advice. For advice specific to your situation, consult a qualified tax adviser, accountant, or solicitor.