HMRC v. Tooth

Holding

A discovery assessment requires both a discovery and a relevant insufficiency; an inadequate return alone does not constitute the deliberate behavior needed to extend the time limit.

Facts

Tooth filed a return reporting a tax-avoidance scheme with sufficient disclosure. HMRC raised a discovery assessment outside the normal time limit.

Reasoning

The UK Supreme Court held that HMRC had not made a genuine discovery and that the taxpayer's return did not amount to deliberate inaccuracy. The decision narrowed HMRC's ability to use discovery assessments for late challenges.