Unidentified income

Discovery assessments and miscellaneous income

In December 2012 an officer in HMRC’s team investigating civil fraud received a report from a VAT compliance officer dealing with a company controlled by the taxpayer. It concerned claims by the company for input tax on imports that were not shown on form C79.

HMRC opened an investigation and found a shortfall between the taxpayer’s income and his expenditure. It issued discovery assessments under TMA 1970 s 29 for each year from 2004-05 to 2013-14.

The taxpayer appealed. The issue concerned the source of the income assessed. The First-tier Tribunal said: ‘The UK still identifies separate types of income for computational purposes even if they are no longer set out in actual schedules.’

In the assessments HMRC did not describe the income assessed relying on ITTOIA 2005 s 687 ‘charge to tax on income not otherwise charged’. The question...