Taxes Management Act 1970 section 29

Assessment where loss of tax discovered

Section 29 gives HMRC the power to raise a "discovery assessment" where it finds that tax has been under-assessed, not assessed at all, or that excessive relief has been given, subject to important safeguards for taxpayers who have filed self-assessment returns.

• HMRC may raise a discovery assessment where income tax or capital gains tax has not been assessed, an existing assessment is insufficient, or relief given has been excessive
• Where the taxpayer has filed a self-assessment return, HMRC can only raise a discovery assessment if the loss of tax was caused carelessly or deliberately, or if HMRC could not reasonably have been expected to identify the problem from the information available to them
• A taxpayer is protected from a discovery assessment if their return was completed in accordance with the generally prevailing practice at the time, even if it contained an error regarding the basis of computation
• Any challenge to a discovery assessment on the grounds that neither protective condition is met must be made by way of a formal appeal against the assessment