Inappropriate discovery

Lansdowne Partners Ltd Partnership was a fund manager. In August 2005 it submitted a partnership statement for the year 2004/05 which included rebated fees paid to the partners.

HMRC treated the rebates as deductible expenditure. However in 2008 the department amended the 2004/05 statement saying the rebated fees were not deductible.

The partnership appealed claiming that HMRC were too late to open an enquiry into the 2004/05 partnership statement; this should have been done no later than 31 January 2007. HMRC claimed that the discovery provisions applied (TMA 1970 s 29 and s 30B).

The General Commissioners allowed the appeal so HMRC appealed.

In the High Court Mr Justice Lewison said that for the discovery provisions not to apply it had to have been...