Discovery assessments made on a taxpayer with no taxable income were wholly unreasonable and were not made to the ‘best judgment’ of HM Revenue and Customs (HMRC).
Background
On 18 January 2018, HMRC issued discovery assessments against the appellant (under TMA 1970, s 29(1)) for the tax years ended 5 April 2005 to 5 April 2016 inclusive. Penalty assessments were also issued. The total amount at stake in the appeal was £342,943. The basis for the discovery assessments was that HMRC alleged they had made a discovery, in that the appellant had failed to declare trading profits for each tax year.
HMRC originally began checking the appellant’s tax position for each of the years on 5 April 2017 and requested details from him. The appellant was uncooperative and failed to produce any significant documentation and/or narrative (the appellant