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HMRC internal manual

Enquiry Manual

Partnerships: Discovery Provisions: Amendments and Assessments

Frequently you will find that going back into closed years, particularly in full enquiry cases, will require the making both of discovery amendments to each year’s partnership return and discovery assessments on the individual partners in respect of non-partnership issues, or in respect of pre-SA years.

TMA70/S30B does not bring additional tax into charge immediately. The tax effect will only occur when you make consequential amendments to the partners’ self assessments, normally once you have finalised the Section 30B amendment to the partnership return with the nominated partner.

Generally speaking a `discovery’ in relation to partnership income will be processed through the partnership statement, but there will be occasions where you have been making enquiries into apparent understatements from a partner’s self assessment and will already have made (protective) discovery assessments under TMA70/S29, before you are in a position to allege that those understatements did in fact have their source in the partnership business EM7150. Once that point has been reached there is nothing to stop you taking action under Section 30B(1) and (2). The discovery assessment can be finalised, or if necessary vacated, once the enquiry is concluded.

You may need to bring additional tax into charge urgently for a `closed’ year. The taxpayer may, for example, refuse to make appropriate payments on account, or you believe that he or she is about to put himself/herself, or his or her assets beyond the reach of HMRC. You will only be able to make a jeopardy amendment for a year where a Section 9A enquiry is open and to the extent that you consider there is a risk of a loss of tax for that year EM1950+.

You may therefore need to consider making a discovery assessment on one or more partners for one or more years to protect HMRC in such cases.