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HMRC internal manual

Self Assessment Claims Manual

Making Enquiries into Claims: Claim Made Outside a Return and Then Included in a Return - When to open an enquiry

Throughout this manual legislative references are to the Taxes Management Act 1970 (TMA70), unless otherwise stated.

Some claims can be made before a notice to file a return, for the year of assessment in question, has been given to the taxpayer. Any such claims made outside the return should then be repeated or reflected in the return, by the taxpayer, when it is subsequently filed.

In these circumstances questions can arise about when to enquire into the claim, whether it is necessary to open an enquiry into the return as well as the claim and which enquiry power to use.

Enquiry opened before the receipt of the return

When it is decided to enquire into the claim before the receipt of the return, the enquiry should be opened under Sch1A Para 5 as the claim is outside a return.

When the return is received, it will be necessary to establish whether an enquiry should also be made into the return under S9A or S2AC. There cannot be a second enquiry into the same claim, see Sch1A Para 5(3).

However a separate enquiry may be needed into the return because

  • the claim has an effect on the return and in particular, the self-assessment
  • in the case of a partnership, the claim has an effect on the returns of the individual partners, or
  • other risks have been identified.

Enquiry not opened before the receipt of the return

When it is decided not to enquire into the claim before receipt of the return, an enquiry can still be made once the return is received.

The enquiry is then opened under S9A or S12AC. It is still possible to enquire into the claim even though it was actually made prior to the return being filed because the claim forms part of the return and we can enquire into anything contained in the return or required to be contained in the return. S9A(4) and S12AC(4) make it clear that this includes any claim or election.

It may also be necessary to determine whether enquiries should be opened into any associated returns and that is especially true when dealing with claims made by partnerships. The effect on the returns of the individual partners must always be considered. Whilst S28B(4) provides some protection here, there could be reasons why separate enquiries need to be opened.

When to open an enquiry

As explained above, claims can be made in a return or outside a return. But it is best practice to open the enquiry as soon as we have identified a risk.

If a claim made outside a return gives cause for concern, we should open an enquiry into that claim under paragraph Sch1A Para 5.

We can always open an enquiry into the remaining entries on the return when it is subsequently filed, if it is appropriate to do so. In many cases it may be necessary to open both enquiries if only to ensure that we can amend the self-assessment to give effect to our conclusions about the claim.

Opening enquiries into both the claim made outside the return and the subsequent return does provide safeguards in that you can

  • question and finally establish the quantum of the claim
  • ascertain the validity of the claim and the claimant’s entitlement to the relief
  • give effect to any conclusions made as a result of the enquiry, and
  • ensure that the correct amount of tax is paid or recovered as the case may be.

As stated at SACM6000 opening the enquiry as soon as the claim is made also allows you to withhold all or part of any repayment claimed. This can prevent problems with the recovery of any tax already repaid to the claimant and, in cases involving the use of avoidance schemes, removes any doubt about our view of the matter. To repay the sum claimed may imply agreement on our part.