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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Enquiries: CTSA enquiries: closing an enquiry: manual closure notices (Action Guide)

To close an enquiry with a manual closure notice in a non-contract settlement case, consider steps 1 - 22 below. The guide is presented as follows.

Enquiry into return for the wrong period Step 1
   
Issuing a manual closure notice with revenue amendment Steps 2 - 10
Appeals against jeopardy amendments Step 11
Amendment anticipating conclusions in a closure notice Steps 12 - 18
Enquiry does not result in an amendment to the return Steps 19 - 21
Interaction with Caseflow or CQI Step 22

Enquiry into return for the wrong period

1. If you conclude that a company tax return under enquiry is for the wrong period, you must amend the company’s AP record to show the correct period or periods before you issue your manual closure notice with revenue amendment. See COM71060 for guidance.
   

Issuing a manual closure notice with revenue amendment

2. If your enquiry results in an amendment to the return and the wording of the standard COTAX closure notice does not suit your case:
   
  * follow the detailed guidance at EM3871
  * issue a manual closure notice with revenue amendment when you are ready to complete the enquiry, unless you are settling the enquiry by contract settlement. See the Enquiry Manual at EM6000 onwards and COM71120 for information about contract settlements.
3. Your manual closure notice must:
  * say that you have completed your enquiry
  * state your conclusions, taking into account any deferred taxpayer amendment received during the enquiry
  * amend the return to give effect to the conclusions stated in the notice.
  If a taxpayer amendment was received during the enquiry and for some reason you have not considered the amendment during your enquiry, you should say so in the closure notice using the free format message field.
  Follow the guidance in EM3878 if your case involves other circumstances, such as where your conclusions affect other returns made by the company or returns made by other companies.
4. Do not attempt to record a manually issued closure notice with revenue amendment on COTAX at this point as you may create spurious output.
5. On the same day that you issue the manual closure notice with revenue amendment:
  * use function MRSC (Maintain Repay / Realloc Signals (Company)) to inhibit reallocations or repayments to or from any AP of the company
  * use function MAPS (Maintain AP Signals) to enter the enquiry ended date equal to today’s date, that is the date you are issuing your manual closure notice with revenue amendment.
6. Use RAMA option ‘prepare a revenue amendment’ to enter the figures that reflect your conclusions and to calculate the amended liability, but store it as a draft instead of issuing it.
7. Print the draft revenue amendment and use the figures to prepare your manual closure notice with revenue amendment.
8. Issue the manual closure notice with revenue amendment.
9. Use RAMA option ‘prepare a revenue amendment’ again to record the manual issue of a revenue amendment in the figures contained in your draft.
  * Select ‘record manual issue’ from the drop down menu for the ‘do you want to?’ field on screen COT121G.
  * Enter the date of issue as today’s date.
  * Where appropriate, deal with the penalty action dialog box at the end of RAMA which allows you to make, amend or inhibit any tax-related late-filing penalty determination based on the amended assessment.
10. When you have dealt with all the consequences of your enquiry, such as amending other returns as a result of your conclusions, use function MRSC (Maintain Repay / Realloc Signals (Company)) to unset the inhibitions on reallocations or repayments to or from any AP of the company.

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Appeals against jeopardy amendments

11. If there is an open appeal against a jeopardy amendment you need to dispose of it. See COM71050 for guidance on how to do that.
   

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Amendment anticipating conclusions in a closure notice

12. If you receive a revised computation that fully and accurately anticipates your conclusions before you have stated them in a closure notice, confirm that what has been submitted is an amendment and not something else, such as interim computations discussed in ongoing enquiry negotiations.
   
13. How you treat the revised computation depends on whether the time limit for amending the company tax return has expired. See COM23010 for information on time limits.
  * If the time limit has not expired, go to step 14.
  * If the time limit has expired, go to step 17.
14. If the time limit to amend the return has not expired, the amendment is deferred and takes effect when the enquiry is completed.
  Issue a manual closure notice by writing to the company stating:
  * that you have completed your enquiry and concluded that an amendment is needed to the company tax return
  * that the deferred taxpayer amendment has been taken into account in the enquiry
  * that it will satisfy the conclusions of the closure notice so no further amendment is required.
15. On the same day take the following actions. Note that if you cannot use RAMA on the same day as using MAPS, you must use function MRSC (Maintain Repay / Realloc Signals (Company)) to inhibit any reallocations or repayments until you are ready to record the taxpayer amendment then unset the inhibitions after you have recorded the taxpayer amendment.
  Use function MAPS (Maintain AP Signals) to enter the enquiry ended date equal to the date of issue of your manual closure notice.
16. Use the function RAMA ‘record a taxpayer amendment’ option to record the deferred taxpayer amendment on COTAX.
  Enter a message in the free format message field in RAMA saying that the deferred taxpayer amendment has been taken into account in the enquiry and satisfies the conclusions of the closure notice so no further amendment is required.
17. If the time limit has expired, the company cannot amend its return.
  Explain to the company that you cannot accept the revised computation as an amendment because the time limit has expired.
18. When you are ready, use the ‘prepare a closure notice with rev amdt’ option in RAMA to conclude the enquiry and amend the company’s return. See the COM71092 Action Guide.

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Enquiry does not result in an amendment to the return

19. If the enquiry does not result in an amendment to the return, issue a manual closure notice by writing to the company, stating that:
   
  * you have completed your enquiry
  * you have concluded that no amendment is needed to the company tax return.
  The wording on the SEES CTSA closure notice ‘I do not need to make any amendments to the company’s self assessment return form’ meets this requirement.
  If a taxpayer amendment was made during the enquiry and for some reason you have not considered the amendment during your enquiry, you should say so in your closure notice.
20. Use function MAPS (Maintain AP Signals) to enter the enquiry ended date equal to the date of issue of your manual closure notice.
21. If the enquiry does not result in an amendment to the return but the company made a taxpayer amendment during the enquiry that was deferred, use the function RAMA ‘record a taxpayer amendment’ option to record the deferred taxpayer amendment.
  See COM71020 and COM23010 for more information

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Interaction with Caseflow or CQI

22. If your office uses Caseflow or CQI, update the relevant system with the settlement details once the enquiry is settled.