In Corfield, Corfield and Charlton v HMRC, the First-tier Tribunal decided that "discovery" assessments issued by HMRC were not valid because the taxpayers had made adequate disclosure in their returns.

Three decisions in the First-tier Tribunal (or Special Commissioners) since the landmark Court of Appeal decision in Veltema have applied three different tests for what qualifies as adequate disclosure. There is no clarity on which is correct. However, the Corfield approach and guidance is worth understanding as it is closest to common sense. It is explained in this e-bulletin.


The facts of Corfield1relate to tax avoidance, but the decision is based on general principles.

41 individuals had entered into a tax avoidance scheme. HMRC opened enquiries for 38 of them. However, through administrative error they missed the enquiry window for three. After the enquiry window had closed, the returns came to the attention of the officer in charge of challenges to the scheme, who issued the disputed discovery assessments.

The taxpayers had made standard form disclosure in their tax return. This set out the facts needed to follow the technical analysis, once the law was understood. In the view of the Tribunal it was clear from these facts that there had been tax avoidance.

Adequate disclosure

If the Tribunal's decision is correct, then the following disclosure is needed to prevent a discovery assessment.


Enough facts must be disclosed to make a notional HMRC officer consider bona fide that he has reason to believe that there is a "reasonable likelihood" that additional tax is due.

The disclosure must include figures to make it possible to estimate the amount of the insufficiency (as explained in Bessie Taube Trustees3 (paragraph 86)).

The legislation provides a restrictive list of sources that HMRC should be taken to consider, in addition to the tax return itself. Since Veltema2 it has been clear that this is an exhaustive list. Corfield makes clear that even where the issue is a scheme disclosed under DoTAS, the facts set out on the AAG1 (the form giving notification to HMRC under DoTAS) are excluded.


The return does not need to provide full technical analysis.

However, some technical commentary is generally needed:

  • to identify the basis on which the self-assessment is made
  • to "make it glaringly obvious" to the notional officer that he needs to  research textbooks or the Manuals, or call a specialist (and if so which specialist), in order to understand the point clearly
  • to flag that the taxpayer's analysis is not the only possible analysis

Otherwise, a disclosure with no technical statements is effective only if the technical point is simple enough to be understood from the return by a notional HMRC officer with only "some knowledge of tax law" and "elementary arithmetic". In avoidance situations, less may be needed.

Note that the Tribunal did not engage with HMRC's position (which reflected paragraphs 18 and 19 of Statement of Practice 1/06) that where a taxpayer takes a different view from HMRC's published view, it is necessary to spell that out. On balance this does not seem necessary.

Two other points

The Tribunal held that there is a "discovery" whenever an Inspector changes his mind or a new Inspector takes a new view. There is no need for new information to come to light. This has been the subject of debate, but the Tribunal referred to House of Lords authority confirming the position beyond doubt4.

To reach a view on when disclosure can prevent an assessment, the Tribunal first analysed the circumstances when an Inspector can make a discovery assessment. This is essential to the decision, and this is where the Tribunals have reached three different decisions (in Corfield, Hankinson5, and Corbally-Stourton6). Corfield considers the other two cases, and of the three it most closely reflects common-sense and practice. But it must also be noted that on the Tribunal's analysis it is hard to reconcile Corfield with the words of the legislation. This may be the basis for an appeal.

Please click here to view the reported decision.