EM7561 - Partnerships: enquiries: concluding an enquiry - partial closure notices

A Partial Closure Notice (PCN) can be issued to conclude your enquiries in respect of a matter whilst keeping the enquiry into the remainder of the return open. 

The objective of issuing a PCN is to make one or more matters final either by agreement or following an appeal to the tribunal. The PCN must state that you have completed your enquiries into the matter, state your conclusions and make the amendment required to the partnership return to give effect to those conclusions, or state that no amendment is required. See EM7563.

It’s important to note that, under statute, it’s the notice itself that amends the return. That is why the notices are written in the past tense, as the amendment is made when the notice is issued.

What is a matter

For operational reasons we often identify particular parts of a return that we concentrate on. Those ‘parts’ are often referred to as risks, issues or matters. If those risks are settled in a PCN, we now refer to these as ‘matters’.

A matter is any part of the return that can become final by being amended but without affecting other parts of the tax return or being affected by other parts of the tax return. This could be a single entry on the return, several entries on the return that need to be considered together or a supplementary page.

For example, a claim to Capital Allowance, a deduction for a particular expense or a claim to a relief. In a complex avoidance arrangement involving several transactions, the matter may be the overall arrangements that were used to achieve a tax advantage rather than each amount deducted.

Ideally, these matters would be identifiable from your enquiry correspondence. It is these matters that need to be described in your partial closure notices, so it must be clear to the taxpayer and ultimately any tribunal or court, which matters you have enquired into and are now completing in the PCN. You should therefore describe a matter in a PCN in the same way as you described it in the enquiry correspondence.

The description of the matter should be clear, concise and specific. It should not include any conclusions or potential amendments to tax calculations.

The way you describe a matter is particularly important for a PCN. This is because you can only complete the enquiry into a matter by PCN where the matter

• is discrete and self-contained, and
• can be made final on its own without affecting any other matter you’re enquiring into

To any person looking at the enquiry as a whole, it must also be clear which matters have been made final and which matters are still under enquiry.

The issuing of a PCN must be approved by your authorising officer on form PCN101, which is available on SEEs.

You must obtain approval prior to issuing a PCN from an authorising officer on form PCN101. The Form PCN101, which is available in SEES for approving the issue of a PCN, asks you to provide the ‘Description of the matter’ to be completed by the PCN. The approving officer should check that the description is succinct and of sufficient detail for the taxpayer to be able to identify it. When completing your PCN you should copy and paste the ‘Description of the matter’ from form PCN101 into the SEES PCN template.

For more guidance on partial closure notices (PCNs), including guidance for approving officers, see CH279600+.

<p></p>