EM3260 - Discovery: staleness

Staleness

The Supreme Court, in the case of HMRC v Tooth [2021] UKSC 17, has determined that a discovery cannot become stale and therefore invalidate an assessment. Paragraph 76 states:

“In our judgment, contrary to the latter part of para 37 in the decision in Charlton, there is no place for the idea that a discovery which qualifies as such should cease to do so by the passage of time. That is unsustainable as a matter of ordinary language and, further, to import such a notion of staleness would conflict with the statutory scheme. That sets out a series of limitation periods for the making of assessments to tax, each of them expressed in positive terms that an assessment “may be made at any time” up to the stated time limit.”

Any challenges on the grounds of staleness should now be resolved.

Corporate discovery

The Supreme Court, in the case of HMRC v Tooth [2021] UKSC 17, has determined that there is no principle of collective knowledge within HMRC. This means that one officer’s knowledge cannot be deemed to be imparted on another officer. Paragraph 78 states:

“Mr Ghosh submitted that once a discovery is made by one person it cannot be made again by another. We do not accept this. It is perfectly possible, as a matter of ordinary language, to speak of someone making a discovery for himself or herself even if it is something already known to others. The approach in the authorities supports this view. As we have explained above, since section 29(1) is concerned, so far as is relevant, with a discovery made by an officer of the Board, the question is whether the officer of the Board who is deciding whether to make a discovery assessment under that provision has subjectively made a discovery that there has been an under-assessment of tax.”

The Supreme Court has also determined that an officer can make the same discovery as another officer. What matters is that the officer who has made the assessment has made a discovery of a loss of tax.