---
title: "Discovery Assessments: Challenging Out-of-Time HMRC Claims"
url: https://taxdisputes.co.uk/2026/11/discovery-assessments-challenging-out-of-time-hmrc-claims/
date: 2026-11-06
modified: 2026-11-06
lang: en
author: "Muhammad Awais Bahadur"
description: "HMRC can only reopen a closed tax year within strict time limits and only if the statutory conditions are met. This guide explains the 4, 6, 12 and 20 year limits, the enquiry window, what counts as information made available, and how our tax litigators challenge out-of-time discovery assessments."
categories:
  - "Discovery assessment"
  - "HMRC Assessments"
  - "HMRC Campaigns"
  - "HMRC Penalty"
tags:
  - "appeal HMRC assessment"
  - "careless or deliberate"
  - "discovery assessment"
  - "enquiry window"
  - "First-tier Tribunal"
  - "HMRC discovery assessment"
  - "HMRC Tax Disputes"
  - "HMRC time limits"
  - "out of time assessment"
  - "section 29 TMA 1970"
  - "tax barristers London"
  - "tax litigation solicitors"
image: https://taxdisputes.co.uk/wp-content/uploads/2026/11/Time-Approval-and-Sealed-Decisions-1024x683.png
word_count: 1619
---

# Discovery Assessments: Challenging Out-of-Time HMRC Claims

*A discovery assessment allows HMRC to raise extra tax for a year it would otherwise have to treat as closed. It can only do so within strict time limits and only if specific statutory conditions are met. Where HMRC is out of time, or cannot satisfy those conditions, the assessment can be cancelled in full. But the argument has to be raised on appeal, and the deadline to appeal is short.*

If you have received a discovery assessment for a tax year that ended some time ago, the first question is not how much HMRC says you owe. It is whether HMRC was entitled to issue the assessment at all. This guide explains the time limits, the other conditions HMRC must meet, and how a [tax appeal](https://taxdisputes.co.uk/hmrc-tax-appeals-solicitors-london/) is built to challenge an out-of-time claim. It builds on our general guide to [HMRC discovery assessments](https://taxdisputes.co.uk/2026/05/hmrc-discovery-assessments-explained/) and our [ultimate guide to challenging a discovery assessment](https://lexlaw.co.uk/solicitors-london/ultimate-guide-to-hmrc-discovery-assessments-how-to-challenge-appeal-2026/).

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## What Is a Discovery Assessment and When Can HMRC Use One?

Under [section 29 of the Taxes Management Act 1970](https://www.legislation.gov.uk/ukpga/1970/9/section/29), an HMRC officer who discovers that income tax or capital gains tax has not been assessed, that an assessment is insufficient, or that a relief is excessive, may assess the tax needed to make good the loss. Company tax has an equivalent power in Schedule 18 to the Finance Act 1998.

The power is normally used once the window for opening a formal enquiry has closed, or after an enquiry has ended. HMRC often acts on information from third parties, data matching, a later return or an offshore disclosure. A discovery assessment is therefore a way of reopening a year that the taxpayer reasonably believed was finished, which is why the law surrounds it with safeguards.

## The Time Limits HMRC Must Meet

The limits depend on why HMRC says tax was lost, and they run from the end of the tax year or accounting period concerned:

| Basis | Limit | Source |
| ----- | ----- | ------ |
| Ordinary limit (income tax and capital gains tax) | 4 years | [Section 34 TMA 1970](https://www.legislation.gov.uk/ukpga/1970/9/section/34) |
| Loss brought about carelessly | 6 years | [Section 36(1) TMA 1970](https://www.legislation.gov.uk/ukpga/1970/9/section/36) |
| Loss brought about deliberately, and certain other cases | 20 years | Section 36(1A) TMA 1970 |
| Offshore matters and certain offshore transfers | 12 years | [Section 36A TMA 1970](https://www.legislation.gov.uk/ukpga/1970/9/section/36A) |
| Company tax | 4, 6 or 20 years from the end of the accounting period | Schedule 18, paragraph 46, Finance Act 1998 |
| VAT assessments | 4 years, or 20 years where the loss is deliberate and in certain other cases | [Section 77 VATA 1994](https://www.legislation.gov.uk/ukpga/1994/23/section/77) |

The 12 year offshore limit has exclusions, including where HMRC received relevant overseas information in time to be reasonably aware of the loss. VAT uses its own assessment regime rather than discovery assessments, so it is covered by [separate rules and a separate challenge strategy](https://taxdisputes.co.uk/2026/01/how-to-challenge-a-vat-assessment-2026-guide/).

Two points matter for clients. First, a loss brought about by someone acting on your behalf, such as an accountant or agent, is treated as brought about by you. Secondly, the extended limits are not automatic. HMRC must be able to establish the behaviour that unlocks them.

## Why the Behaviour Finding Decides Whether HMRC Is In Time

Most out-of-time disputes are really disputes about behaviour. If HMRC assesses a year that is five years old, it must show the loss was brought about carelessly. For a year that is ten years old, it must show the loss was brought about deliberately. If the evidence does not support that finding, the ordinary four year limit applies and the assessment fails.

We test HMRC's allegation against the documents it relies on, the instructions you gave your adviser, and what was disclosed at the time. Our guide to [HMRC behaviour assessments](https://taxdisputes.co.uk/2026/01/hmrc-behaviour-assessments-careless-deliberate-or-concealed/) explains how HMRC classifies conduct. A behaviour finding can also drive [penalties](https://taxdisputes.co.uk/hmrc-penalties/), so defeating it often reduces more than one liability.

## The Second Hurdle: Returns, the Enquiry Window and Information Made Available

Time limits are not HMRC's only hurdle. Where you filed a return, section 29(3) prevents a discovery assessment unless one of two conditions is met:

- **The first condition.** The loss of tax was brought about carelessly or deliberately by you or by someone acting for you.

- **The second condition.** When the enquiry window closed, or the enquiry ended, an HMRC officer could not reasonably have been expected, on the information made available to HMRC by then, to be aware of the loss.

The enquiry window is normally twelve months from the date the return was filed. If HMRC was given enough information within that period, and chose not to open an enquiry, it will struggle to say it discovered something new. Information counts as made available if it was:

- in the return or in accounts, statements and documents accompanying it;

- in a claim for the same year, or documents accompanying it;

- produced in the course of any enquiry into the return or claim; or

- information whose existence and relevance an officer could reasonably infer from those sources, or which you notified to HMRC in writing.

The statute also extends this to the returns for the two preceding years. In practice, a short explanation in the white space of a return, a note to the accounts, or an earlier letter to HMRC can be the difference between a valid assessment and a void one. These are exactly the details we look for in your file.

## Other Reasons a Discovery Assessment Can Fail

Beyond time limits and information made available, we also examine:

- **Prevailing practice.** Under section 29(2), tax cannot be assessed where the return followed the practice generally prevailing when it was made, even if HMRC later changes its view.

- **Whether there was a genuine discovery.** A change of mind about information HMRC already held is not the same as discovering a loss, and the timing and circumstances of the alleged discovery can be significant.

- **Validity.** The correct taxpayer, year, capacity, notice and procedure must all be right. Technical defects can invalidate an assessment.

- **Quantum.** Even a valid assessment may overstate the tax. Reliefs, allowances and losses are often missed.

## Where the Time Limit Argument Must Be Raised

This is the point that catches taxpayers out. Both section 34(2) and section 29(8) provide that an objection that the time limit has expired, or that the statutory conditions are not met, can only be raised on an appeal against the assessment. Ignoring the assessment, or writing to HMRC to point out that it is out of time, does not protect you. The argument has to be in a valid appeal.

In general it is for HMRC to show that it made a valid discovery and that the conditions for assessing are satisfied, while you must be ready to show that any assessment is excessive. The decision will turn on evidence: your filed return, accounts and computations, correspondence with HMRC, and HMRC's own records. We deal with disclosure and prepare [witness statements](https://taxdisputes.co.uk/taxpayer-witness-statement-drafting-representation-hmrc-advice/) so the evidence supports your case from the start.

## The Deadline to Appeal and the Pressure to Pay

The deadline to appeal against a discovery assessment is generally 30 days from the date of the assessment. For direct taxes you appeal to HMRC first, and you can then ask for an [HMRC internal review](https://taxdisputes.co.uk/hmrc-internal-review-appeals-solicitors-london/) or take the appeal to the [First-tier Tribunal](https://taxdisputes.co.uk/first-tier-tax-tribunal-solicitors-london/), as the [GOV.UK tax tribunal guidance](https://www.gov.uk/tax-tribunal) explains. Each stage has its own time limit, so the steps should be planned with a lawyer from the outset.

If you are already late, there may still be options. The tribunal can allow a late appeal in some circumstances, and our guides to [late appeals to the Tax Tribunal](https://taxdisputes.co.uk/late-hmrc-tax-appeals/) and [late appeals against HMRC](https://taxdisputes.co.uk/2026/09/late-appeals-against-hmrc-is-it-too-late/) explain what the tribunal looks at. You can usually apply to postpone payment of disputed tax while an appeal is pending, but interest is generally charged if the appeal fails. See our guide to [paying now and appealing later](https://taxdisputes.co.uk/2026/09/pay-now-appeal-later-disputed-hmrc-debts/) before deciding.

## Related Risks: Penalties, Enforcement and Past Advisers

A discovery assessment often arrives alongside a penalty assessment, and sometimes after a [tax investigation](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/). If the assessment becomes final and is unpaid, HMRC may pursue enforcement, including a statutory demand or [winding-up petition](https://windinguppetitionsolicitors.co.uk/opposing-a-winding-up-petition/). Our guide explains [when HMRC enforcement becomes insolvency action](https://windinguppetitionsolicitors.co.uk/when-hmrc-enforcement-becomes-insolvency-action/), and our insolvency team can act alongside the tax team if that risk arises.

If the loss of tax arose because a previous accountant or tax adviser made a mistake or failed to warn you, you may also have a claim against them. Our [professional negligence team](https://professionalnegligenceclaimsolicitors.co.uk/bad-hmrc-finance-advice-sue-advisor/) can advise, and [limitation periods](https://professionalnegligenceclaimsolicitors.co.uk/limitation-period-in-professional-negligence-claims/) for such claims run separately from the tax deadlines.

## How LEXLAW Can Help With Your Discovery Assessment

Our [tax litigation team](https://lexlaw.co.uk/our-people/) of solicitors and barristers, working from chambers in Middle Temple, acts for individuals and businesses against HMRC. Our [HMRC tax dispute lawyers](https://lexlaw.co.uk/hmrc-tax-dispute-lawyers/) include counsel who previously worked in house at HMRC, so we know how it builds and defends these assessments. We will:

- diarise the appeal deadline immediately and tell you at once if it has already passed;

- build a timeline of the year, the return, the enquiry window and every disclosure made to HMRC;

- test HMRC's allegation of carelessness or deliberate behaviour against the evidence;

- identify what was made available to HMRC and whether the statutory conditions are met;

- draft focused grounds of appeal and represent you at the [First-tier Tribunal](https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/), with barrister advocacy;

- negotiate with HMRC and, where appropriate, explore [alternative dispute resolution](https://taxdisputes.co.uk/2026/08/alternative-dispute-resolution-with-hmrc-explained/), so you can settle from a position of strength; and

- deal with penalties, payment and any enforcement in parallel.

Our advice is legally privileged, unlike advice from accountants. Our discounted fixed fee for a detailed review of your papers and a conference with both a solicitor and a barrister starts at £1,750 plus VAT. We do not offer legal aid or free advice and we generally act in substantial disputes. If you want a fresh view on an assessment or on your current representation, ask about a [second opinion](https://taxdisputes.co.uk/second-opinion/).

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