Was discovery stale by the time an assessment was issued?

Mr Atherton entered the Romangate scheme to avoid paying tax on £5m partnership income by creating an employment loss. The effect was to reduce his tax liability from £2m to nil. He disclosed his participation in the scheme in the white space of his 2007-08 return and claimed the Romangate loss in box 20 of the form.

In May 2009 HMRC opened an enquiry into the return and initiated a claim against the taxpayer in the county court for the £2m tax that would have been paid but for his participation in the Romangate scheme. This was stayed. In December 2013 it was agreed that the scheme was ineffective. Further after the Supreme Court’s decision in CRC v Cotter [2013] STC 2480 HMRC decided its 2009 enquiry was invalid and issued a discovery assessment. 

The taxpayer appealed arguing that the discovery was stale. 

The First-tier Tribunal dismissed the...