Mehrban – Discovery assessments invalid due to staleness

12 May 2021

In Kashif Mehrban v HMRC [2021] UKFTT 53 (TC) the First-tier Tribunal (FTT) held that a three-year delay in issuing a 'discovery' assessment issued pursuant to section 29,Taxes Management Act 1970 (TMA), resulted in the discovery becoming 'stale', even though the delay had not been the result of HMRC inaction.


Mr Mehrban (the Appellant) appealed against assessments that were issued to him by HMRC in respect of tax years 2002/03 to 2015/16, pursuant to section 29, TMA (the discovery assessments). 

The Appellant owned and ran a newsagent shop. Following visits to his business in 2013/14, HMRC concluded that he had under-declared profit from the business and investigated him under its Code of Practice 9 (COP 9) procedure. The Appellant was invited to enter a contractual disclosure facility under suspicion of fraud and on 7 November 2014 he made a statement that he had understated taxable profits.

Between 2014 and 2016, HMRC and the Appellant were in ongoing correspondence, through which HMRC obtained further information to assist it to quantify by what amount the profit had been under-declared. During this time, due to ill-health, there was a delay in the Appellant providing certain information to HMRC. 

On 21 April 2017, HMRC issued the discovery assessments, which the Appellant appealed. 

FTT decision 

The appeal was allowed.

It was accepted that HMRC had made a discovery, for the purposes of section 29, TMA. The issue for determination by the FTT was whether the discovery had become stale by the date on which the discovery assessments were issued. 

The FTT held that HMRC had not been entitled to raise the discovery assessments as late as it had. The HMRC officer concerned had made the discovery of the tax insufficiency in March 2014, when she had decided to open a COP 9 investigation, but HMRC had only issued the discovery assessments in April 2017. In the FTT's view, this was "an exceptional period of delay".

The FTT accepted that some of the delay may have been caused by the Appellant's lack of co-operation but noted that Pattullo v HMRC [2016] UKUT 270 (TCC) could not be interpreted as suggesting that a discovery only became stale if the delay resulted from HMRC's inaction. In the view of the FTT, examining the cause of the delay was unlikely to be helpful in assessing staleness. If HMRC had enough information to make the discovery, any further information obtained from the Appellant would be otiose. Once HMRC had made a discovery, it had to calculate the insufficiency and assess the tax within a reasonable period of time. 

The FTT commented that HMRC was essentially arguing that the "clock" measuring staleness should have been stopped during the period when the Appellant had been uncooperative. The FTT rejected this argument. Once HMRC had made the discovery in 2014, the clock could not be paused while HMRC awaited further information. 


This decision is an interesting development in a line of cases that consider the evolving concept of 'staleness'. In the view of the FTT, if a discovery has been made by HMRC for the purposes of section 29, it will only remain a discovery for a reasonable period of time, irrespective of the reasons for delay in issuing the assessment.

The concept of staleness was considered in HMRC v Tooth [2019] EWCA Civ 826 and Beagles v HMRC [2018] UKUT 380 (TCC), both of which are on appeal to the Supreme Court and Court of Appeal, respectively. Given that HMRC does not accept the concept of staleness, the outcome in those appeals is eagerly awaited.

The decision can be viewed here 

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