EM2163 - Working the enquiry: partial closure notices: partners and partnerships

The section explains the interaction between

  • enquiries into a personal or trustee return opened under TMA70 section 9A, or enquires into a company tax return under FA98 Schedule 18 para 24,   
  • enquiries opened into a partnership return under TMA70 section 12AC

A partner in an ITSA partnership can be an individual, a trust or a company. Partners must include both their non-partnership income and their share of the partnership income on their own Self Assessment return (the partner’s ‘individual return’).

If you are enquiring into the return of a partner, where they have partnership income that is subject to a partnership enquiry, you should get agreement from the caseworker carrying out the partnership enquiry before you issue a partial closure notice (PCN) or final closure notice (FCN) to a partner.

An enquiry opened into a partner’s individual return is into the whole return, even if only specific matters are referred to in the notice of intention to enquire, see EM1502. A PCN can only be issued for an enquiry if there is at least one further matter still being checked. For a partner, this will not always be obvious if the partnership return is also under enquiry, because there may be matters in the partner’s return (or required to be in the partner’s return) that will be affected by the outcome of the enquiry into the partnership return.

The outcome of a partnership enquiry may be that entries in the partnership return are amended under TMA70, s28B. As a consequence, the partners’ individual returns must be amended under TMA70 s28B(4). We do not need to have an open enquiry into a partner’s individual return to make amendments as a consequence of partnership return being amended, see EM7560.

Alternatively, the outcome of a partnership enquiry may be that entries on the partnership return are not amended. Instead the partner’s individual return has to be amended under TMA70 s28A based on information gathered during the course of the partnership enquiry. To make an amendment under s28A, the partner’s return must be subject to an open enquiry under

  • TMA70 s9A for an individual  
  • TMA70 s12ZM for NRCGT
  • FA98 Schedule 18 para 24(1) for a company

If a FCN has been issued for an enquiry into a partner’s individual return, we are prevented from making any further amendments under TMA70 s28A.

So if you have an open enquiry into a partner’s individual return, you should not issue an FCN, see EM2160, if there is:

  • an open enquiry into the partnership return for the same year, and
  • the possibility that entries on the partner’s individual return will need to be amended as a result of the partnership enquiry.

You will need to obtain confirmation of the partnership enquiry position from the officer handling that enquiry.