Sometimes, but not without limits. In the United Kingdom, HM Revenue & Customs (HMRC) may in limited circumstances defend a VAT assessment on a different legal basis from the reason originally given. The liability must concern the same transactions or series of transactions, the change cannot increase the assessed amount, and the result must not be unreasonable in public-law terms or obviously unfair. HMRC says its best practice, where statutory time limits allow, is to withdraw the first assessment and issue a fresh one.
Self Assessment discovery assessments involve a different test. A new argument is not necessarily a new discovery: the critical event is when an officer newly concludes, acting honestly and reasonably, that an existing assessment is insufficient. The answer therefore depends on the tax, the wording of the notice, what HMRC had previously concluded, and whether the assessment is under appeal or already final.
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What “changing the reason” can mean
The phrase can describe two legally different situations:
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A free scan shows the junk files, broken settings and background clutter dragging Windows down - then fixes them in one click.Free scan · Windows 10 & 11- A VAT assessment is being maintained on another basis. HMRC may try to uphold the existing amount using a different explanation for the same transactions.
- A Self Assessment discovery assessment is being issued. HMRC must satisfy the statutory discovery conditions, including a newly reached conclusion that the taxpayer’s assessment is insufficient.
These are not interchangeable rules. The VAT guidance concerns the basis of an existing VAT assessment. The discovery rules arise under section 29 of the Taxes Management Act 1970 and turn on what the officer newly concluded and when. A conclusion about one type of assessment should not be treated as a universal rule for every HMRC tax notice.
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VAT: when HMRC may rely on a different basis
HMRC’s VAT assessment manual discusses the Court of Appeal decision in BUPA Purchasing Ltd. HMRC says that an assessment can, in limited circumstances, be maintained for a reason different from the reason originally notified. Three constraints are central.
The liability must concern the same transactions
The changed basis must relate to the same transactions, or the same series of transactions, covered by the original assessment. HMRC cannot use the idea of a changed reason as a way to move onto unrelated supplies, periods or dealings. When checking a notice, identify the transaction dates, VAT periods, supplies and amount originally assessed, then compare them with the explanation now being advanced.
The assessed amount cannot be increased
HMRC’s guidance states that maintaining an assessment on a different basis does not permit an increase in the assessed amount. A taxpayer should therefore compare the figure on the original notice with the figure HMRC is now seeking to uphold. A larger liability is not simply a change of explanation; it raises a separate question about HMRC’s power to make or amend an assessment and any applicable time limit.
The change must not be unreasonable or obviously unfair
HMRC says it would not try to uphold a change of basis if doing so would be unreasonable in the public-law sense or obviously unfair to the taxpayer. This is a fact-sensitive safeguard rather than a general permission to substitute any argument HMRC later prefers. For example, the fairness question may depend on whether the original notice gave enough information to understand the liability, whether the taxpayer’s evidence and appeal were directed to the original case, and whether the new basis would deprive the taxpayer of a realistic opportunity to respond.
HMRC’s stated best practice: withdraw and reissue where possible
HMRC’s manual says the preferred course, where statutory time limits permit, is to withdraw the original assessment and issue a fresh assessment. That creates a clear notice setting out the basis on which HMRC says tax is due. The manual’s best-practice statement is distinct from the legal limits HMRC attributes to the Court of Appeal: a taxpayer may still need to argue that the proposed change falls outside those limits or is unfair.
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Self Assessment discovery assessments: a different legal question
A Self Assessment discovery assessment is not validated merely because HMRC finds a better argument after issuing a notice. Section 29 of the Taxes Management Act 1970 requires the statutory discovery conditions to be met. The Upper Tribunal’s decision in Paul Harrison v HMRC [2023] UKUT 00038 (TCC) explains the distinction between a new reason and a new conclusion.
What counts as the relevant “discovery”
In its discussion of the earlier Charlton formulation, the Upper Tribunal quoted:
“In our judgment, no new information, of fact or law, is required for there to be a discovery. All that is required is that it has newly appeared to an officer, acting honestly and reasonably, that there is an insufficiency in an assessment.”
The emphasis is on the officer newly reaching the view that the tax assessment is insufficient. New information is not always required, but there must be a newly formed conclusion by an officer acting honestly and reasonably, subject to the other statutory conditions.
A new reason is not automatically a new discovery
If HMRC had already concluded that an assessment understated tax, finding another reason for describing the shortfall does not, by itself, create a fresh discovery. The same applies where HMRC switches to a different mechanism for addressing an insufficiency it had already identified. The chronology matters: determine what the officer had concluded before the discovery assessment was issued, not merely which legal argument appears in the final notice.
Why the papers and timeline matter
For a discovery challenge, collect the original return and any amendment, HMRC correspondence, compliance-check notes or conclusions disclosed to you, the discovery assessment, and the dates on each document. The question is whether HMRC newly concluded that there was an insufficiency, or whether it had already reached that conclusion and later changed the explanation. Paul Harrison is a tribunal decision applied to its statutory and factual context; it does not mean HMRC can always change its mind, nor does it remove the other conditions in section 29.
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| Issue | VAT assessment basis change | Self Assessment discovery assessment |
|---|---|---|
| Core question | Can an existing assessment be maintained for a different reason? | Has an officer newly concluded that the existing assessment is insufficient? |
| Main limitation | Same transactions or series; no increase in the assessed amount; no unreasonable or obviously unfair change | A new reason alone is insufficient if HMRC had already concluded that an insufficiency existed |
| HMRC process point | HMRC says withdrawing the first assessment and issuing a fresh one is best practice where time limits allow | The statutory discovery test and the facts and timing of the officer’s conclusion control |
| Documents to examine | Original notice, transactions, VAT periods, amount and explanation of the changed basis | Return, earlier conclusions, discovery notice, stated rationale and chronology |
The comparison shows why a general answer such as “HMRC can change the reason” is misleading. The legal question changes with the tax and the procedural route.
What happens when an assessment is appealed
HMRC’s guidance says that, once an assessment has been made, it can be varied through the appeal process. The manual identifies several routes:
- An agreement between HMRC and the taxpayer settling the appeal.
- Certain review outcomes treated as an agreement where the taxpayer does not respond within the applicable acceptance period.
- A review officer’s conclusion varying the amount, subject to the stated appeal route.
- A tribunal decision varying the assessment.
The exact effect depends on the notice and the procedural stage. If an assessment was not appealed and has become final and determined, HMRC says a further assessment needs to be considered rather than simply treating the closed assessment as freely changeable. “Final and determined” is therefore an important status to establish before arguing about a revised explanation.
How to respond when HMRC changes its stated basis
1. Identify the notice and tax
Write down whether the document is a VAT assessment, a Self Assessment amendment, a discovery assessment or another type of Revenue assessment. Record the tax period, date issued, amount, payment date and any reference to an appeal, review or statutory power. Do not assume that a letter described informally as a “reassessment” uses the legal rules for every tax.
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2. Put the original and new explanations side by side
Extract the reason HMRC first gave and the reason now being relied on. Mark any change in transactions, tax periods, rate, valuation, exemption, calculation method or legal provision. For VAT, check whether both explanations concern the same transactions or series and whether the amount has increased. For Self Assessment, ask when HMRC first concluded that the return was insufficient.
3. Check the procedural status
Find out whether an appeal was lodged, whether a review is in progress, whether an agreement was reached, or whether the assessment is already final and determined. HMRC’s stated routes for variation operate through these stages; the answer is different if a tribunal or review has already dealt with the amount.
4. Preserve the evidence
Keep the notice and envelope or electronic delivery record, every HMRC letter, meeting note, schedule, working paper and submitted document. Make a dated chronology. In a discovery case, the chronology may show whether the alleged discovery was genuinely new. In a VAT case, it can show whether the changed basis came after you had built an appeal around a materially different case.
5. Frame the appeal around the actual notice
HMRC’s general Self Assessment guidance says an appeal against a Revenue assessment, Revenue amendment or jeopardy amendment will normally be made on the ground that the assessment or amendment is incorrect, or that actual liability has yet to be determined. Explain precisely why the amount, transactions, legal basis or procedural conditions are wrong. If the issue is a changed basis, say which limits you rely on and attach the documents that prove the original position.
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This material does not establish one appeal deadline for every reassessment. Deadlines depend on the type of notice and the facts. Read the appeal instructions on the notice and obtain advice promptly if the date is close. Missing a deadline can create a separate procedural problem even where the underlying challenge is strong.
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Questions taxpayers commonly ask
Can HMRC increase a VAT assessment by changing its reason?
HMRC’s VAT guidance says the assessment cannot be increased merely by maintaining it on a different basis. A higher amount would need to be considered under the rules governing a new or amended assessment, including any applicable time limits and procedural requirements.
Does HMRC need new evidence for a discovery assessment?
Not necessarily. The formulation quoted in Paul Harrison says no new information of fact or law is required, but it must newly appear to an officer acting honestly and reasonably that the assessment is insufficient. A new explanation for an insufficiency already identified is not, on its own, the required new discovery.
Can HMRC use the VAT rule for income tax or other taxes?
No automatic cross-over follows. The VAT guidance concerns VAT assessments, while discovery assessments are governed by section 29 and the case law interpreting it. The tax named on the notice and the statutory power used by HMRC determine which test applies.
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What if I already appealed the original assessment?
Variation generally occurs through the appeal, review, agreement or tribunal routes described by HMRC. Ask HMRC to identify the procedural route for the new basis and check whether the revised position changes the amount or the issues in dispute. If the assessment was never appealed and is now final and determined, HMRC says a further assessment must be considered.
Should I deal with HMRC myself?
A straightforward factual correction may be manageable, but a changed legal basis, discovery assessment, final assessment or imminent deadline can involve technical arguments about statutory powers and chronology. A qualified UK tax adviser or tax disputes solicitor can assess the notice and preserve your position.
Bottom line
For HMRC in the UK, the answer is conditional rather than an unrestricted yes or no. A VAT assessment may sometimes stand on a different reason only for the same transactions or series, without increasing the amount and without an unreasonable or obviously unfair result; HMRC says a fresh assessment is preferable where time permits. For Self Assessment, the key issue is whether an officer newly concluded that the assessment was insufficient, not whether HMRC later found a different argument. Start with the exact notice, amount, transactions, tax periods, procedural status and dates before deciding how to respond.
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