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Taxation (UK) · The procedures relating to compliance checks, appeals and disputes

Determinations and Discovery Assessments in ACCA TX-UK

Updated 11 October 2026 · Fact-checked

A determination is HMRC's estimate of tax due when no return has been filed. A discovery assessment is an extra assessment when HMRC finds tax has been under-assessed. It needs careless or deliberate behaviour, or HMRC being unaware. Time limits are 4 years, 6 years for careless and 20 years for deliberate, from the end of the tax year.

Understand Determinations and Discovery Assessments

Normally HMRC relies on the return you file. Two powers let it act outside a normal enquiry. Each covers a different problem.

A determination deals with a missing return. If you have not filed a return, HMRC can estimate the tax due and issue a determination. It is HMRC's best estimate, and it lets HMRC start collecting. It is a temporary fix. Once you file the return, the determination is replaced by your own self-assessment.

A discovery assessment deals with a return that has been filed but is wrong. HMRC discovers that income or gains are missing, or that an assessment is too low, and raises an assessment for the extra tax. It is mainly used when the normal enquiry window has closed or the enquiry is complete, so HMRC cannot simply amend the return.

HMRC cannot use a discovery assessment just because it changed its mind. There must be a loss of tax, and one of two conditions must be met. Either the loss was brought about carelessly or deliberately by the taxpayer (or someone acting for them), or HMRC could not reasonably have been expected to know about the problem from the information it had when the enquiry window closed or the enquiry ended. If you gave full disclosure and HMRC simply missed it, a discovery assessment is not allowed.

The time limit depends on behaviour and is counted from the end of the tax year (or accounting period for a company). The limit is 4 years for a genuine error, 6 years for careless behaviour and 20 years for deliberate behaviour. Penalties for errors can be added on top, and you can appeal against either type of assessment.

Key rules to remember

Determination
No return filed → HMRC estimates tax due → replaced when the taxpayer files the return
For individuals, the determination must be made within 4 years of the end of the tax year. It is a stop-gap, not a final liability.
Discovery assessment conditions
Loss of tax + (careless or deliberate behaviour OR HMRC could not reasonably have been aware)
Both parts are needed. Full and fair disclosure that HMRC overlooked does not qualify.
Time limit: ordinary
4 years from the end of the tax year
Applies where there is no careless or deliberate behaviour.
Time limit: careless
6 years from the end of the tax year
Count from the end of the tax year, 5 April, not from the filing date.
Time limit: deliberate
20 years from the end of the tax year
Applies to deliberate understatement, whether or not concealed.
Maximum error penalties
Deliberate and concealed 100%; deliberate not concealed 70%; careless 30%
Minimums: careless 0% if unprompted and 15% if prompted. Deliberate not concealed 20% unprompted, 35% prompted. Deliberate and concealed 30% unprompted, 50% prompted.

How to solve Determinations and Discovery Assessments questions

Use this method for any scenario asking whether HMRC can raise an assessment, or by when.

  1. 1Decide which power applies. No return filed means a determination. A return filed but tax under-assessed means a discovery assessment.
  2. 2For a discovery assessment, confirm there is a loss of tax. If the tax is correct, there is nothing to assess.
  3. 3Test the conditions. Was the taxpayer careless or deliberate? If not, could HMRC reasonably have known from the information it had? Say which condition is met.
  4. 4Classify behaviour: genuine error or reasonable mistake, careless, or deliberate. Use the facts, such as ignoring advice, hiding income or failing to take reasonable care.
  5. 5Find the end of the tax year concerned (5 April, or the end of the accounting period for a company).
  6. 6Add 4, 6 or 20 years to that date and compare it with the date HMRC acts.
  7. 7State the conclusion in one clear sentence, and add the penalty range if the question asks about errors.

Quickest way: Three-question check

When to use it: Use this for OT questions and for the first marks of a written answer.

  1. Was a return filed? No: determination. Yes: discovery assessment.
  2. What was the behaviour? Error 4 years, careless 6 years, deliberate 20 years.
  3. Add the years to the end of the tax year. Is the date HMRC acts on or before it? If yes, in time.

Common mistakes in Determinations and Discovery Assessments

  • Counting the time limit from the filing date or the date of the error

    Students think of when the return was sent in rather than the tax year it relates to.

    Fix: Always start from the end of the tax year, 5 April. For a company, start from the end of the accounting period.

  • Saying a discovery assessment is allowed whenever HMRC finds extra tax

    The word discovery suggests that finding the loss is enough.

    Fix: State both tests: a loss of tax, and either careless or deliberate behaviour or HMRC being unable to reasonably know about it.

  • Treating a determination as the final tax bill

    It looks like a formal assessment from HMRC.

    Fix: Say that it is an estimate and is replaced when the taxpayer files the return.

  • Using a discovery assessment when an enquiry could still be opened

    Students mix up the compliance tools.

    Fix: Discovery is mainly for after the enquiry window has closed or an enquiry has finished. Check the status first.

  • Mixing up 4, 6 and 20 years or applying 6 years to any mistake

    The limits are memorised without the behaviour attached.

    Fix: Link each limit to a behaviour: error 4, careless 6, deliberate 20.

  • Forgetting that penalties are separate from the tax and interest

    Students stop after finding the assessment is valid.

    Fix: Add that interest on underpaid tax and a behaviour-based penalty may also apply, using the penalty table.

Worked examples

Example 1

Sam filed his 2020–21 self-assessment return on time. In March 2027 HMRC discovers that he carelessly omitted £8,000 of rental income. No enquiry was opened. Can HMRC raise a discovery assessment? What would the answer be if the omission were an innocent mistake?

Show the solution
  1. A return was filed and tax is under-assessed, so this is a discovery assessment issue. There is a loss of tax.
  2. The omission was careless, so the behaviour condition is met.
  3. The 2020–21 tax year ended on 5 April 2021.
  4. Careless behaviour allows 6 years, so the limit is 5 April 2027.
  5. March 2027 is before 5 April 2027, so HMRC is in time.
  6. If it were an innocent mistake, the limit would be 4 years, ending 5 April 2025. March 2027 is after that, so HMRC would be out of time.

Answer: Yes, HMRC can assess because the behaviour was careless and the 6-year limit runs to 5 April 2027. If it were an innocent mistake, the 4-year limit would have expired on 5 April 2025, so no assessment.

Example 2

Priya has never filed a return for 2022–23, although she was required to. In February 2027 HMRC issues a determination. Is this in time? What happens if Priya files the return in April 2027?

Show the solution
  1. No return was filed, so the power is a determination, not a discovery assessment.
  2. The 2022–23 tax year ended on 5 April 2023.
  3. The time limit is 4 years from the end of the tax year, which is 5 April 2027.
  4. February 2027 is before that date, so the determination is in time.
  5. A determination is an estimate. When Priya files her return, her self-assessment replaces the determination.
  6. Late filing and late payment consequences would still be considered separately.

Answer: The determination is in time, as it was issued before 5 April 2027. Filing the return in April 2027 replaces HMRC's estimate with Priya's own self-assessment, though late filing consequences may still apply.

Exam tips

  • Always state which power applies first. Many students lose marks by naming the wrong one.
  • In scenarios, underline the behaviour words: careless, deliberate, reasonable care, innocent. They decide the time limit.
  • Write the date calculation out: tax year end, plus the years, then the conclusion. This earns method marks.
  • In OT questions, check dates carefully. A date just after 5 April is out of time.
  • Where a penalty is asked for, quote the maximum for the behaviour and note that the minimum depends on whether disclosure was prompted or unprompted.

Practice questions from The procedures relating to compliance checks, appeals and disputes

Determinations and Discovery Assessments: frequently asked questions

When can HMRC raise a discovery assessment?

HMRC can raise one when tax has been under-assessed and either the taxpayer was careless or deliberate, or HMRC could not reasonably have known about the problem from the information it held. It must also act within the time limit.

What is the time limit for a discovery assessment?

It is 4 years from the end of the tax year for an ordinary error, 6 years for careless behaviour and 20 years for deliberate behaviour. For a company, count from the end of the accounting period.

What is an HMRC determination?

It is HMRC's estimate of tax due when you have not filed a required return. It lets HMRC pursue the tax. When you file the return, your self-assessment replaces the determination.

Can I appeal against a discovery assessment?

Yes. You can appeal against a discovery assessment or a determination in the normal way, as long as you do so within the time allowed. Study the appeals topic for the process.