Corbally-Stourton v HMRC (2008) Sp C 692

The Special Commissioner decision that gave "staleness" its name. For over a decade it was one of the most effective time-based defences to a discovery assessment, until the Supreme Court dismantled it in Tooth. Understanding where the doctrine came from is still essential to understanding why it fell.

Why This Case Matters

Corbally-Stourton is where the "staleness" doctrine begins. Although it was only a Special Commissioner decision, later approved and developed at Upper Tribunal level, it supplied the reasoning that shaped how discovery assessments were understood and challenged for more than a decade, right up until the Supreme Court's obiter rejection of the doctrine in HMRC v Tooth [2021] UKSC 17. Every discovery assessment guide on this site references it, and understanding the reasoning it introduced remains necessary to understand both the older case law that relied on it and the reasons the Supreme Court gave for moving away from it.

The Facts

HMRC had intended to open an enquiry into the taxpayer's self-assessment return. An administrative error meant the notice of enquiry was never validly sent within the statutory window, so no enquiry was ever properly opened. By the time the error came to light, the enquiry window under section 9A TMA 1970 had closed, and HMRC could not simply issue a fresh, valid enquiry notice out of time.

Some three years after the relevant tax year, HMRC instead issued a discovery assessment under section 29 TMA 1970, based on essentially the same information that had been available to it at the time the enquiry ought to have been opened.

Procedural History

• Special Commissioners (Charles Hellier): the taxpayer's appeal succeeded. The discovery assessment was held to be invalid.

The Issue

Whether an HMRC officer can validly "discover" an insufficiency of tax under section 29 TMA 1970 where the relevant information had been available to HMRC for a significant period, and a competent officer could reasonably have been expected to reach the same conclusion earlier, within the time the enquiry window was open.

The Ratio Decidendi

The Commissioner's reasoning proceeded from the ordinary meaning of "discover": something is only discovered if it was not already, in substance, known or knowable to the standard the section requires. An officer cannot manufacture a fresh discovery simply by looking again, later, at facts that had been sitting in HMRC's own files throughout the period when a timely enquiry could have been opened. On the facts, the information that founded the 2008 assessment had been available to HMRC substantially earlier, and nothing had changed in the interim to make the conclusion newly arise.

Status After Tooth

For over a decade, Corbally-Stourton's reasoning was developed and applied in a series of further decisions, becoming known collectively as the "staleness" doctrine: the idea that a discovery assessment could become invalid through the mere passage of time, or through unreasonable delay by HMRC in acting on information already in its possession, independent of any specific statutory time limit.

This does not mean the underlying facts in cases like Corbally-Stourton become irrelevant. The genuine newness of the officer's belief remains a live statutory requirement of section 29 itself, and the section 29(5) protection, which prevents a discovery assessment where a return was made on the basis that a hypothetical officer could reasonably have been expected to be aware of the insufficiency from information made available, continues to do much of the practical work that staleness arguments used to do, though it is a narrower and more technical test than the broad "delay defeats the assessment" argument that had developed in practice before Tooth.

Practitioner Application

• Do not plead staleness as a freestanding ground after Tooth. Advisers who continue to run the pure delay-based argument from Corbally-Stourton without adapting it to the post-Tooth framework are relying on reasoning the Supreme Court has expressly disapproved.
• Reframe delay arguments around genuine newness. Ask whether the officer's belief, at the moment it was actually formed, was genuinely new on the facts and law then known, rather than whether too much time had simply passed.
• Deploy section 29(5) directly. Where the taxpayer's return, together with accompanying documents, put a hypothetical officer of general competence on notice of the relevant insufficiency, section 29(5) may protect the taxpayer regardless of how the staleness argument would have fared.
• Read Corbally-Stourton as background, not authority to plead. It remains valuable for understanding how the modern law on discovery reached its current position, and for understanding why later decisions distinguished or applied it, but it should not be cited today as if the staleness doctrine it originated were still good law.

Frequently Asked Questions