Defending a 20-year SDLT discovery assessment: decision tree (2026)

When HMRC issues a discovery assessment under Schedule 10 Finance Act 2003 reaching back beyond the standard four-year window, two structurally distinct defences sit on the file. They attack different elements of the same notice and they sequence in a particular order. This piece walks the order of argument once the assessment has landed.

The 20-year window under paragraph 31(2A) of Schedule 10 is reached only when HMRC alleges the loss of tax was brought about deliberately by the purchaser or a person acting on their behalf. Volume context from Land Registry data filtered on the transactions price-paid file (queried 2026-06-01): there were 45,270 residential sales at £500,000 or above in 2006 and 8,364 at £925,000 or above — the cohort notionally still inside the 20-year reach today, where slab transitions in the SDLT regime of the time most commonly produce later disputes.

This is general information about how the procedural rules and reported case-law operate. It is not advice. Speak to a qualified adviser before acting.

The two structural attacks

A 20-year discovery assessment contains two independent pleadings that the taxpayer can challenge separately:

The first goes to whether HMRC can re-open the position at all. The second goes to whether the 20-year window — rather than the 4-year or 6-year window — is the right one. They are independent: a Hicks defence does not concede Tooth, and a Tooth defence does not concede Hicks.

The carelessness-and-deliberate evidence side of this is set out in the evidence bar piece; the Tooth ratio itself is set out in the Tooth case-law summary. This piece sits one layer above both: the procedural sequencing.

The decision tree

Stage 1: does the notice clear the Hicks threshold at all?

Stage 2: if Stage 1 fails for HMRC, the assessment is invalid and the Tooth question never arises. If Stage 1 succeeds, move to Stage 2 — is the inaccuracy deliberate as defined in Tooth?

Stage 3: if Stage 2 fails for HMRC, the 20-year window is unavailable. The assessment is either in-time under the 6-year carelessness window (paragraph 31(2)) or out of time. Quantum, reliefs and computational disputes follow.

Stage 4 only: argue computational and quantum points. These are the weakest defences because they accept the procedural framework HMRC has chosen — which is why they are run last, not first.

HMRC issues 20-year discovery assessment
                |
                v
Stage 1 — Hicks attack: was there an actual discovery?
                |
        +-------+-------+
        |               |
   Yes (HMRC wins)   No (taxpayer wins) → Assessment invalid; appeal allowed
        |
        v
Stage 2 — Tooth attack: deliberate?
        |
        +-------+-------+
        |               |
       Yes              No → 20-year window unavailable; falls to 6 or 4-year window
        |
        v
Stage 3 / 4 — quantum and reliefs disputes

The reason this sequence matters is evidentiary. Stage 1 turns on the contemporaneous papers held by the HMRC officer — what was on the file, when, and what the officer wrote down. Stage 2 turns on the taxpayer's and any agent's state of mind at the moment of filing. The two evidence universes barely overlap, and putting them in front of a tribunal in the wrong order tends to dilute both.

Stage 1 — the Hicks "no actual discovery" attack

Hicks v HMRC confirmed the long-standing principle that "discovery" in the technical sense requires an HMRC officer to form a new view that was not previously held on the file. Where the same officer, or the team holding the file, already had the relevant facts and reached an earlier conclusion (whether explicit or by closing an enquiry), the position is "stale" and there is no fresh discovery on which to hang a new assessment. The principle traces back through Charlton v HMRC [2013] STC 866 (UT) and Tooth itself, where the Supreme Court re-affirmed at paragraphs 60-65 that staleness as a doctrine had been narrowed but not abolished — the requirement that the officer's view be genuinely new remains.

What the defence has to put in front of the tribunal:

• Subject access requests under Article 15 UK GDPR and the Data Protection Act 2018 to extract HMRC's contemporaneous file notes
• The HMRC officer's risk-assessment file, including the Connect-system risk score at the time the return was processed
• Any prior enquiry correspondence on the same transaction or any closely related matter
• The internal transfer-of-officer record showing whether the file changed hands and on what date

The tribunal will look at whether the alleged new view was genuinely new in light of what was on the file. Where the same risk has been considered and not acted upon at an earlier point, the Hicks attack is structurally available.

Stage 2 — the Tooth "not deliberate" attack

Tooth v HMRC is the controlling Supreme Court authority on what "deliberate" means in the discovery and penalty regimes. The court at paragraphs 42-47 held that "deliberate inaccuracy" requires a subjective state of mind — the person who entered the inaccuracy must have known at the time of filing that the entry was wrong. Carelessness, or even a strong case for negligence, is not enough. The taxpayer (or agent) must have intentionally inserted an entry they knew to be inaccurate.

What the defence has to put in front of the tribunal:

• The taxpayer's contemporaneous file: instructions to the conveyancer, draft returns, correspondence in the run-up to filing
• The conveyancer's contemporaneous file: attendance notes, internal memos, the SDLT-1 working papers
• Where the SDLT return was filed by an agent, the chain of instructions and any caveats or qualifications recorded at the time
• Any contemporaneous tax opinion held on the file at filing — a written opinion documenting a view that turned out to be wrong is structurally inconsistent with deliberateness

The Tooth test is a high bar for HMRC. The Supreme Court was explicit that mistakes, including foreseeable mistakes, and even mistakes that a competent agent should have caught, do not on their own discharge the deliberate burden. Where the contemporaneous papers show a genuine (even if wrong) view of the law, the deliberate window is not the right window.

The HMRC-attributed taxpayer vs agent split

In a 20-year discovery, HMRC can plead that the deliberate behaviour belonged to either the taxpayer or "a person acting on the taxpayer's behalf" — typically the conveyancer or SDLT specialist. Each pleading has to be defeated separately. Tooth itself was a case about an agent's state of mind being attributed to the taxpayer. The defence has to address both heads:

• Was the taxpayer's own state of mind deliberate? Evidence: the taxpayer's instructions, any disclosures made to the agent, any deliberate withholding of facts.
• Was the agent's state of mind deliberate? Evidence: the agent's file, the agent's working papers, any internal sign-off and risk-rating record.

A defence that rests only on the taxpayer's state of mind leaves the agent-attribution pleading unanswered, and vice versa.

The appeal-route mechanics

A discovery assessment is appealed under paragraph 35 of Schedule 10 Finance Act 2003, which incorporates the Taxes Management Act 1970 appeal regime by reference. The 30-day appeal window runs from the date the assessment is "given" — see the 30-day appeal-window piece which walks the parallel mechanic in the information-notice regime. Grounds must be stated in writing to the issuing officer.

There is a separate statutory amendment route at paragraph 30A of Schedule 10 — the partial closure notice mechanic walked in the partial closure notice piece — but partial closure does not apply to a discovery assessment that has already been raised. Once the discovery assessment is on the file, the route is appeal, not amendment.

A practical timeline for a complex 20-year discovery:

Worked-example anchor — a £1.75m London purchase

A £1,750,000 standard-rate purchase carries an SDLT charge of £123,750 under current English rates (HMRC residential rates, 2026 — see the stamp duty calculator for the band-by-band breakdown). If a discovery assessment alleges a £1.75m transaction filed in 2006 was understated by, for example, a misapplied multiple-dwellings or non-residential classification, the contested principal can easily run into six figures even before penalties and interest.

The Land Registry data shows 8,364 residential sales at £925,000 or above in 2006 and 11,190 in 2007 — the slab transitions of the time produced the conditions for misclassification at the high-value end of the market. Today, those cohorts are notionally still in 20-year reach. The upstream compliance-check mechanics that precede a discovery assessment of this kind are set out in the enquiry-window pillar.

The penalty pleading runs alongside, not inside, the discovery pleading

A finding of deliberate behaviour in the discovery proceedings does not automatically resolve the penalty position under Schedule 24 Finance Act 2007. The penalty assessment is a separate notice, with its own grounds, its own appeal window and its own evidentiary record. Where the penalty pleading depends on the same deliberateness allegation, defeating Stage 2 of the discovery defence will typically defeat the penalty too — but the procedural assessments are independent and the taxpayer should not treat them as a single appeal.

Quick reference

CTA — and the disclaimer

Try the stamp duty calculator for the band-by-band breakdown that anchors most discovery-assessment quantum disputes, or browse the cost-intelligence guides for the rest of the SDLT compliance cluster.

This is general information about how the statutory framework and reported case-law operate. It is not legal, tax, conveyancing or any other professional advice. A 20-year discovery assessment is a serious procedural step. Speak to a qualified solicitor, barrister or tax adviser before deciding how to respond.

Based on 30,980,257 Land Registry residential transactions, 296 English billing-authority council-tax records and the statutory frame at Schedule 10 Finance Act 2003 (data queried 2026-06-01).