Appropriate discovery

HMRC’s automatic system made an erroneous refund to the taxpayer after his self assessment return contained an error that suggested he had overpaid tax. He did not question the repayment.

The Revenue received the end-of-year PAYE return from the taxpayer’s employer and realised the taxpayer’s return had been wrong. The department made a discovery assessment for the correct amount.

The taxpayer did not dispute HRMC’s figures but said he should not be expected to repay the money three years after having received it.

The First-tier Tribunal decided the discrepancy between the PAYE return and the taxpayer’s self assessment form was a discovery (TMA 1970 s 29(1)). The error was a result of the careless behaviour of the taxpayer who should have checked the accuracy of his return before submitting it.

HMRC were entitled to raise a discovery assessment within four years from the end of the...