An enquiry is HMRC’s routine way of checking a return it is still in time to question: it needs no suspicion, only a notice given inside the enquiry window. A discovery assessment is the exceptional route for a year that is closed: an officer must actually discover a loss of tax and, where a return was filed, show either careless or deliberate behaviour or that the return did not adequately disclose the problem. The burden of proof differs too, which is why the route HMRC uses shapes the whole dispute.
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What is the basic difference between an enquiry and a discovery assessment?
An enquiry under section 9A of the Taxes Management Act 1970 (TMA 1970) is a check of a self assessment return while it is still open. HMRC does not have to give a reason for opening one, and the enquiry extends to anything contained in the return, or required to be contained in it, including claims and elections. It ends with a closure notice that states the officer’s conclusions and makes any amendments to the return.
A discovery assessment under section 29 TMA 1970 is a separate assessment made by an officer who discovers that income or gains have not been assessed, that an assessment is insufficient, or that relief given is excessive. HMRC’s Enquiry Manual at EM3202 describes it as the tool for recovering lost tax once the time limit to open an enquiry has passed, or where no return was submitted. The guidance is clear that if HMRC is still in time to open an enquiry into a filed return, it should issue a notice of enquiry rather than a discovery assessment.
When can HMRC open an enquiry?
Only within the time allowed by section 9A(2) TMA 1970, explained in more detail on our page about the enquiry window for tax returns:
- for a return delivered on or before the filing date, up to 12 months after the day it was delivered;
- for a late return, up to the quarter day following the first anniversary of delivery;
- for an amended return, up to the quarter day following the first anniversary of the amendment, but then only into the amendment and whatever it affects.
The quarter days are 31 January, 30 April, 31 July and 31 October. A return can be the subject of only one notice of enquiry, apart from a further one given because of an amendment. Company tax returns follow the same pattern under paragraph 24 of Schedule 18 to the Finance Act 1998, except that for a company in a group other than a small group the 12 months run from the filing date rather than the delivery date.
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When can HMRC use a discovery assessment instead?
Section 29(1) TMA 1970 allows an officer who discovers a loss of tax for a year to assess the amount that ought in the officer’s opinion to be charged. Where the taxpayer has filed a return for that year, section 29(3) adds a restriction: no discovery assessment can be made unless one of two conditions is met.
- The behaviour condition (section 29(4)): the loss was brought about carelessly or deliberately by the taxpayer or someone acting on their behalf.
- The information condition (section 29(5)): when the enquiry window closed, or when a closure notice was issued, an officer could not reasonably have been expected to be aware of the loss from the information made available. This is the hypothetical officer test.
Section 29(2) gives a further protection: no assessment can be made where the error is about the basis of computing the liability and the return followed the practice generally prevailing when it was made. Where no return was filed, none of these conditions applies, although EM3202 says a determination should usually be used if a notice to file was issued and HMRC is still in time.
Discovery also has a second role inside an open year. EM3253 gives the example of a partial closure notice on employment income which later proves insufficient: HMRC cannot reopen the closed issue, so it may make a discovery assessment instead.
How long does HMRC have under each route?
| Point | Enquiry | Discovery assessment |
|---|---|---|
| Starting the process | Notice must be given within the enquiry window | Assessment must be made within the assessing time limit |
| Normal limit | 12 months from delivery for an on time return | 4 years after the end of the tax year (section 34) |
| Careless loss | Window is unchanged | 6 years (section 36(1)) |
| Deliberate loss or failure to notify | Window is unchanged | 20 years (section 36(1A)) |
| Finishing | No statutory deadline, but the taxpayer can ask the tribunal to direct a closure notice (section 28A(4)) | Not applicable: the assessment is a single act |
HMRC’s guidance at EM3220 also refers to a 12 year limit for income tax and capital gains tax involving an offshore matter or offshore transfer. For companies, paragraph 46 of Schedule 18 sets the same 4, 6 and 20 year limits, counted from the end of the accounting period; see discovery assessments on companies.
Who has to prove what?
In an enquiry, HMRC does not need to justify opening it. If the taxpayer appeals against the closure notice amendments, section 50(6) TMA 1970 says the assessment stands good unless the tribunal decides the appellant is overcharged, so in practice the taxpayer has to show the figure is wrong.
With a discovery assessment the first steps belong to HMRC. EM3251 accepts that in any appeal HMRC must show that an officer made the discovery on which the assessment is based and, where a return was filed, that one of the two conditions applies. EM3259 says the same for extended time limit assessments: HMRC must show behaviour serious enough to support the time limit relied on. Once HMRC has done that, the onus normally passes to the taxpayer to show the amount is excessive. Our page on the burden of proof in tax appeals sets out how the tribunal handles these stages.
A worked example
Illustration only. Priya files her 2022 to 2023 return on time on 20 January 2024. It shows rental income from one flat but omits a second flat she let for part of the year.
- Until 20 January 2025, HMRC can simply open an enquiry. It does not need to say why or prove any behaviour.
- After that date the year is closed to enquiry. HMRC can only assess by discovery, and because Priya filed a return it must rely on carelessness or on the information condition. Nothing in her return pointed to a second property, so the information condition is likely to be met.
- The normal discovery time limit runs to 5 April 2027, four years after the end of the 2022 to 2023 tax year. If HMRC shows the omission was careless it can assess until 5 April 2029, and if deliberate until 5 April 2043.
How do you challenge each one?
Both are challenged by appeal, in writing, to the officer, within 30 days, stating the grounds (section 31A TMA 1970). For an enquiry, the 30 days run from the date the closure notice was issued; for a discovery assessment, from the date of the notice of assessment. With a discovery assessment, section 29(8) says an objection that neither condition is met can only be made on an appeal against the assessment, and section 34(2) says the same about an objection that the time limit has expired. Tax under appeal remains payable unless you apply to postpone it under section 55.
What mistakes do taxpayers and advisers make?
- Treating the end of the enquiry window as finality. It ends HMRC’s easy route, not its power to assess. Discovery remains available for years afterwards if a condition is met.
- Arguing only about the amount. In a discovery appeal the first questions are whether there was a discovery, whether a condition is met and whether the assessment is in time. Those points are HMRC’s to prove and are often stronger than an argument about figures.
- Assuming a closure notice protects everything. A partial closure notice closes only the issues it covers, and section 29(5) is tested at the date of the relevant closure notice, on the information then available.
- Missing the 30 day limit. A late appeal needs HMRC’s agreement or the tribunal’s permission, so diarise the date on the notice.
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Related Accountapedia entries
- How to appeal a discovery assessment
- Discovery assessments on companies
- The difference between a director and a shareholder
- Provision vs accrual: what is the difference
- Exempt or outside the scope of VAT: the difference
Sources
- legislation.gov.uk: Act 1970 c. 9, section 9A
- legislation.gov.uk: Act 1970 c. 9, section 28A
- legislation.gov.uk: Act 1970 c. 9, section 29
- GOV.UK: Manual page EM3202
- GOV.UK: Manual page EM3253
- legislation.gov.uk: Act 1970 c. 9, section 34
- legislation.gov.uk: Act 1970 c. 9, section 36
- GOV.UK: Manual page EM3220
- legislation.gov.uk: Act 1998 c. 36, schedule 18
- legislation.gov.uk: Act 1998 c. 36, schedule 18
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.