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HMRC internal manual

Self Assessment: the legal framework

Self Assessment for partnerships: enquiries into partnership Tax Returns

The enquiry procedures apply to partnership tax returns

Section 12AC

Partnership tax returns are subject to precisely the same enquiry procedures as individual returns.

Section 12AC(1)

An officer of the Board is entitled to enquire into any partnership tax return, or amendment to such return, providing the officer notifies the partnership of the intention to do so.

Section 12AC(2) & (3)

The enquiry must normally be opened within 12 months of the day on which the return was received, but if the tax return (or amendment) was received after the filing date, the enquiry period ends with the first quarter date following the 12-month anniversary of when the tax return (or amendment) was received.

Enquiries can be commenced only once in respect of any particular tax return or amendment .

Any enquiry into a partnership statement automatically extends to the partners’ own tax returns

Section 12AC(6)

A notice of enquiry into a partnership tax return is treated as including a notice of enquiry to each of the members of that partnership who have filed their own personal returns. HMRC will endeavour to notify each partner when it commences an enquiry into the partnership tax return. In dealing with a large partnership HMRC may agree a particular way forward to avoid unnecessary paperwork, but will always keep in mind the individual’s rights.

In the case of a mixed partnership of individuals and companies Section 12AC(6) ensures that the partner’s tax return is deemed to be under enquiry even though the time limit for commencing an enquiry under Section 9A, or paragraph 24 Schedule 18 Finance Act 1998, may have passed.

The purpose of this section is simply to allow HMRC to make any adjustments to the self assessments of individual partners following an enquiry into the partnership tax return. All the partners’ tax returns remain open until the partnership enquiry is complete.

This section does not mean that other (non-partnership) aspects of a partner’s tax return are automatically under enquiry. The non-partnership aspects of a partner’s tax return can only be reviewed if a separate enquiry is opened under Section 9A (or, where the time limit for such a notice has passed, if the ‘discovery’ rules apply). Similarly, the completion of an enquiry into one part of the tax return (for example, the partnership income) has no consequence for any separate enquiry into the other part (the non-partnership income).

An enquiry into an individual partner’s tax return does not automatically open up the partnership return for enquiry.

Any matters relating to the enquiry are dealt with through a nominated partner

Section 12AC(1)

The partner nominated to file the partnership tax return and partnership statement is normally responsible for dealing with any enquiry, but where that partner is no longer available, for example because of retirement, a different partner may be nominated as the successor.

The nominated partner is responsible for keeping the other partners informed of the progress of the enquiry.