Validity of assessment relating to unauthorised surcharge

HMRC applied to strike out the taxpayer’s appeal against a discovery assessment made in 2017 in relation to an unauthorised payment charge in 2011-12. The taxpayer said the assessment was out of time because it had been made more than four years after the year of assessment. Further HMRC had the information to know there was a tax underpayment before the deadline for assessments passed. It need not have waited until 2017 to make the assessment. In effect the discovery had gone stale.

The Revenue said the assessment was within the time limit because the loss of tax had been caused by carelessness. In that circumstance the time limit was six years.

The First-tier Tribunal noted that two important aspects of the appeal had been the subject of another  Monaghan (TC6408). These were the question of staleness and that of whether HMRC was entitled to raise an assessment...