EM7554 - Partnerships: enquiries: scope of the partnership enquiry
S12AC
An enquiry into the partnership tax return extends to anything contained, or required to be contained, in the return. This includes any claim or election.
If notice of intention to enquire was given in respect of an amendment to the partnership return at a time when it was no longer possible to enquire into the original return (or an enquiry into the original return had already been completed), the scope of the enquiry will be restricted to matters which relate to the amendment or matters that are affected by the amendment.
Example
If partnership A made and delivered a partnership return for the year ended 5 April 2021 on 31 January 2022, and they later amended the return on 20 June 2022.
The last date to enquire into the original return is 31 January 2023. If notice of intention to enquire was given on or before 31 January 2023, the scope of the enquiry would be broad and would extend to anything contained, or required to be contained, in the return. The amendment made on 20 June 2022 could also be considered as part of the enquiry.
If notice of enquiry was not given on or before 31 January 2023, notice of intention to enquire may still be given in respect of the amendment made to the return. The last date to enquire into the amendment is 31 July 2023. If notice of intention to enquire was given after 31 January 2023 but on or before 31 July 2023, then the scope of the enquiry would be limited to checking the amendment or matters affected by the amendment.
Extending the enquiry
In your opening notice you may have indicated to the customer that you were checking certain matters, or certain areas of the partnership return. During your enquiry you may identify other areas of the return which need to be checked.
It’s important to remember that, legally, an enquiry extends to anything contained or required to be contained in the return (except for instances where we are enquiring into the amendment only). You are therefore entitled to check any entry in the return, even if you have not previously indicated this to the customer.
It’s good practice to tell the customer that you are now widening your check and what you now intend to review. The customer may ask for the reasons behind your decision to extend your review. You should explain to them what information has led to your decision to extend your review. Apart from explaining why you did not review these matters earlier you do not need to justify your decision. You should continue your enquiry by requesting all the information that you now consider is necessary to check the partnership return.
If the customer does not agree, then they will normally have a right of appeal against any information notice that you issue to obtain the information under Schedule 36 Finance Act 2008.
Where disputes arise about extending the scope of your review or your request for information, you should consider whether Alternative Dispute Resolution (ADR) may help you and the customer resolve these issues. See the ADR web pages for guidance about ADR.
If the customer does not agree with the outcome of ADR, they still have the right to appeal. In any proceedings before the tribunal. They will be able to advance the argument that the information you have specified is not reasonably required for the purpose of checking their tax position because you have already obtained all the relevant information. Alternatively, the nominated partner will be able to ask the tribunal to direct that the partnership enquiry should be brought to a conclusion.
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