Case: Discovery assessment upheld because forensic accountant was negligent

Released 9 August 2018

[2018] UKFTT 0359 (TC)

Judge Jane Bailey

Decision released 28 June 2018

Discovery assessment – TMA 1970, s. 29.

Harrison [2018] TC 06573


The Appeal was against an assessment made by the Respondents under TMA 1970, s. 29 for the tax year 2007-08.

The Appellant referred his appeal against the assessment to the Tribunal. The sole ground of appeal was that TMA 1970, s. 29 prevented the raising an assessment more than 12 months after making a discovery. The case management hearing took place on 21 September 2017. The Tribunal issued its decision on 3 October 2017. The Tribunal identified there were two aspects of competency which might not have been determined in the decision of 3 October 2017: ‘staleness’ and negligent conduct.

The Tribunal considered that given the Tribunal’s conclusion on 3 October 2017 that the assessment of September 2015 was made in time must mean the discovery was sufficiently fresh. The Tribunal therefore concluded that the issues in dispute were:

Was the Appellants conduct negligent to which a loss of tax would be attributable?

What were the partnership’s assessable profits?

Has the partnership incurred losses or expenses from its property development trade?

Is the partnership able to set losses from the forensic accountancy trade against profits from property?

Whilst the Appellant made representations that the correct income of the partnership was much lower than that assessed, the Tribunal rejected them. The Appellant did not refer to legislation or case law to support his argument and had accepted that the partnership was entitled to receive £200,000.

The Tribunal also rejected the suggested losses of the property development trade because the Appellant has failed to establish that the partnership incurred any expenses or had any losses. The Appellant had put forward unevidenced hand written calculations prepared six years after the tax year in question.

The Tribunal also concluded that the losses of expenses from the forensic accountancy trade within the partnership were available to reduce the partnership’s property development profits in 2007/08. Furthermore, the Tribunal were not satisfied that there were any expenses of losses given the lack of evidence.

The Appellant failed to satisfy the Tribunal as to the accuracy of the partnership’s profits, expenses or losses and therefore they were satisfied there was a loss of tax. The loss of tax was attributable to the Appellant’s failure to notify chargeability and that amounted to negligent conduct. The Tribunal considered that the Appellant had traded as a forensic accountant for many years.

The Appeal was dismissed.


The case demonstrates the importance of maintaining records and also that a persons experience will be considered when determining negligence.

For further guidance on discovery assessments, see Direct Tax Reporter at ¶184-280.

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