Discovery assessments: Catch up with the latest changes

Discovery assessments look set to be applied to the High-Income Benefit Charge under new legislation set out by the Government.

A loophole regarding discovery assessments and the charge was brought to light following the case of HMRC V Mr Wilkes last year.

The case saw the Upper Tribunal agree that the assessment for the High-Income Child Benefit Charge (HICBC) was not validly raised, following the HMRC appealing an earlier decision in Mr Wilkes’ favour.

HMRC are now appealing the decision to the Court of Appeal, but the case has had an impact on tax legislation in a bid to close the loophole.

Ahead of the appeal, part of the Finance Act 2022 includes plans to change the discovery provisions retrospectively so they can now be applied to collect any underpayment of the High-Income Benefit Charge.

HMRC says the move will provide certainty that HMRC may recover HICBC through the issue of a discovery assessment.

So, are you aware of discovery assessments and the High-Income Benefit Charge? Make sure you brush up as the measure is introduced.

What is a discovery assessment?

A discovery is a power held by HMRC to reopen closed periods if they believe there has been an underpayment of tax. They will then issue an assessment for the tax they think has been underpaid.

What it means for the High-Income Benefit Charge

The High-Income Benefit Charge is a tax charge for any individual who earns over £50,000 and either they or their partner receive Child Benefit or someone else gets Child Benefit for a child living with the individual.

The new rules clarify that those who are liable to pay the charge must notify HMRC, or risk HMRC recovering HICBC through the issue of a discovery assessment.

It is stressed on the government’s website that the measure “does not introduce any new or additional obligations or liabilities; it simply maintains the widely accepted and understood position that existed until recent litigation called this into question.”


Are you worried about a discovery assessment? For expert advice on related matters, do not hesitate to get in touch today.