Adequate information was included in company documents

The taxpayer a UK company appealed against a discovery assessment issued for 2015-16 (FA 1998 Sch 18 para 41). This was on the basis that it had provided the information in its CT600 tax return computation and accounts for the relevant period.

The First-tier Tribunal asked whether the hypothetical officer would have been aware that there was an amount in the accounts that had not been brought into tax. It decided the answer ‘must be yes’. This was because ‘a recognised but unrealised gain’ was included in the taxpayer’s accounts provided to HMRC and despite not being in the profit and loss it was ‘very clearly stated in the statement of recognised gains and losses (STRGL)’. The amount was clearly not included in the tax return.

Given that they were dealing with large UK group companies the hypothetical officer should appreciate standard inter-group financing...