Whether a discovery was stale

HMRC issued a closure notice and discovery assessments for under-declared income from the taxpayer’s property interests. It had incorrectly issued a closure notice on 24 February 2016 for 2009-10 not appreciating that no enquiry was open for that year. It later realised that the closure notice was invalid and purported to rectify the matter by issuing a discovery assessment on 15 August 2018.

The First-tier Tribunal found that HMRC had discovered the insufficiency of tax for 2009-10 by 24 February 2016 so there was no new discovery when it issued the assessment on 15 August 2018. The judge concluded ‘it was plain’ the discovery was ‘stale’ when the assessment was issued indeed it was at least 30 months old.

HMRC counted that ‘the doctrine of “staleness” was unsound and devoid of statutory authority’. The judge said HMRC was entitled to hold this view but he rejected it and applied...