HM Revenue and Customs was directed to close a tax return enquiry as an earlier discovery assessment for the same tax year and on the same matter had been settled by agreement.
HM Revenue and Customs (HMRC) opened an enquiry (under FA 1998, Sch 18, para 24(1)) into the appellant company’s tax return for 2010/11. A closure notice was subsequently issued, concluding that the company had understated its profits.
The company had already submitted its tax return for 2011/12 by that time. HMRC considered it likely that the company had understated its profits and tax liability for 2011/12 in the same way as for 2010/11, based on the presumption of continuity.
HMRC was within the time limit to open an enquiry into the tax return for 2011/12, but instead issued a discovery assessment (under TMA 1970, Sch 18, para 41). The HMRC officer also imposed penalties for 2010/11 and 2011/12. The company appealed
