The following is then text of HMRC's own manuals
EM3255 - Reopening Earlier Years: Discovery in SA Years: Conditions
TMA70/S29(2)
TMA70/S29(4)
TMA70/S29(5)
TMA70/S29(8)
FA98/SCH18/PARA 42(1)
FA98/SCH18/PARA 43
FA98/SCH18/PARA 44
FA98/SCH18/PARA 45
A discovery assessment can only be made if one of the following two conditions is fulfilled
the further tax that is due arises from the fraudulent or negligent conduct EM5125 of the taxpayer, or a person acting on his or her behalf EM5130 or
the officer could not have been reasonably expected, on the basis of the information made available EM3260 to him or her, to be aware of the underassessment when the enquiry window closed or a completion notice was issued.
If the taxpayer considers that neither condition applies his objections can only be dealt with by an appeal against the assessment.
A discovery assessment may not be made where a taxpayer has made a return and
the return was made in accordance with prevailing practice but at a later date (after the expiry of the time limit for opening an enquiry) the Revenue changes its practice in relation to the treatment of some particular item and it is realised that there has been a loss of tax, or
the enquiry window has closed for the return/amendment, or a closure notice of an enquiry into the return/amendment has been issued and the information enabling the discovery to be made was `made available' to the Revenue before the window closed or the enquiry closed. This means that a change of opinion on information that has previously been made available EM3260 to the Revenue will not be grounds for a discovery, (the second condition above). This does not apply where the taxpayer has been negligent or fraudulent and the condition in TMA70/S29(4) is fulfilled (the first condition above).
In addition to these legislative restrictions, there are other occasions on which you should not make a discovery assessment EM3265.
If HMRC are using Williams to say that a change of opinion constitutes discovery then this would seem to be at odds with the HMRC's own manuals where it says
" This means that a change of opinion on information that has previously been made available EM3260 to the Revenue will not be grounds for a discovery,"
If you are satisfied that HMRC is out of the ball park you might suggest to them that they might care to submit their papers to the HO Specialist on SA before you ask for the appeal to be listed for the Commissioners - and yes the Specials would probably be best if the HO Specialist finds in favour of the officer.
regards
bill@wamstaxltd.com
http://www.wamstaxltd.com