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F5. During an enquiry

Amendment of self-assessment during enquiry to prevent loss of tax

Personal, trustee, partnership return

"(1)     This section applies where an enquiry into a return is in progress in relation to any matter as a result of notice of enquiry by an officer of the Board under section 9A(1) of this Act.

(2)     If the officer forms the opinion—

(a)     that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and

(b)     that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

he may by notice to the taxpayer amend the assessment to make good the deficiency so far as it relates to the matter.

(3)     In the case of an enquiry which under section 9A(5) of this Act is limited to matters arising from an amendment of the return, subsection (2) above only applies so far as the deficiency is attributable to the amendment.

(4)     For the purposes of this section the period during which an enquiry is in progress in relation to any matter is the whole of the period—

(a)     beginning with the day on which notice of enquiry is given, and

(b)     ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued." (TMA 1970, s.9C)

Company tax return

"(1)     If after notice of enquiry has been given and while the enquiry is in progress in relation to a matter an officer of Revenue and Customs forms the opinion—

(a)     that the amount stated in the company's self-assessment as the amount of tax payable is insufficient, and

(b)     that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

they may by notice to the company amend its self-assessment to make good the deficiency [so far as it relates to the matter.

(2)     In the case of an enquiry which under paragraph 25(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above only applies so far as the deficiency is attributable to the amendment." (FA 1998, Sch 18, para 30(1) - (2))

 

"(6)     For the purposes of this paragraph, the period during which an enquiry is in progress in relation to any matter is the whole of the period—

(a)     beginning with the day on which notice of enquiry is given, and

(b)     ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued." (FA 1998, Sch 18, para 30(6))

SDLT

"(1)     If at a time when an enquiry is in progress into a land transaction return the Inland Revenue form the opinion—

(a)     that the amount stated in the self-assessment contained in the return as the amount of tax payable is insufficient, and

(b)     that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

they may by notice in writing to the purchaser amend the assessment to make good the deficiency.

(2)     In the case of an enquiry that under paragraph 13(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above applies only so far as the deficiency is attributable to the amendment.

(3)     For the purposes of this paragraph the period during which an enquiry is in progress is the whole of the period—

(a)     beginning with the day on which notice of enquiry is given, and

(b)     ending with the day on which the enquiry is completed." (FA 2003, Sch 10, para 17)

Appeal within 30 days to HMRC

"(3)     An appeal may be brought against an amendment of a company's self-assessment by an officer of Revenue and Customs under this paragraph.

(4)     Notice of appeal must be given—

(a)     in writing,

(b)     within 30 days after the amendment was notified to the company,

(c)     to the officer of the Board by whom the notice of amendment was given." (FA 1998, Sch 18, para 30(3) - (4))

No right to notify appeal to Tribunal until end of enquiry

 

"(2)     If an appeal under subsection (1)(a) above against an amendment of a self-assessment is made while an enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment]6 [none of the steps mentioned in section 49A(2)(a) to (c) may be taken in relation to the appeal until a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued." (TMA 1970, s.31(2))

"(5)     None of the steps mentioned in section 49A(2)(a) to (c) of the Taxes Management Act 1970 may be taken in relation to the appeal before the completion of the enquiry." (FA 1998, Sch 18, para 30(5))

“Section 31(2) TMA makes it clear that Mrs Randall cannot notify her appeal to the Tribunal until HMRC’s enquiries are completed…The Tribunal does not therefore have jurisdiction in relation to the proceedings.” (Randall v. HMRC [2017] UKFTT 551 (TC), §§34…35, Judge Robin Vos).

Amendment of self-assessment during enquiry to prevent loss of tax

Referral of questions to Tribunal during an enquiry

"(1)     At any time when an enquiry is in progress under section 9A(1) or 12AC(1) of this Act in relation to any matter, any question arising in connection with the subject-matter of the enquiry may be referred to the tribunal for its determination." (TMA 1970, s.28ZA(1))

"(5)     For the purposes of this section the period during which an enquiry is in progress in relation to any matter is the whole of the period—

(a)     beginning with the day on which notice of enquiry is given, and

(b)     ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued."  (TMA 1970, s.28ZA(5))

For company tax returns, FA 1998, Sch 18, paras 31A - 31D are materially identical.

For SDLT returns, FA 2003, Sch 10, para 19 - 22 are materially identical.

Notice of referral must be given jointly

"(2)     Notice of referral must be given—

(a)     jointly by the taxpayer and an officer of the Board,

(b)     …

(c)     to the tribunal" (TMA 1970, s.28ZA(2))

And may be withdrawn by either side unilaterally

"(1)     Either party may withdraw a notice of referral under section 28ZA of this Act" (TMA 1970, s.28ZB(1))

"(1)     an officer of Revenue and Customs or the company may withdraw a notice of referral under paragraph 31A.

(2)     Notice of withdrawal must be given—

(a)     in writing,

(b)     to the other party to the referral and to the Special Commissioners,

(c)     before the first hearing by the Special Commissioners in relation to the referral." (FA 1998, Sch 18, para 31B)

More than one referral permitted

"(4)     More than one notice of referral may be given under this section in relation to an enquiry." (TMA 1970, s.28ZA(4))

Taxpayer means the person to whom notice of enquiry was given

"(6)     In this section “the taxpayer” means—

(a)     in relation to an enquiry under section 9A(1) of this Act, the person to whom the notice of enquiry was given;

(b)     in relation to an enquiry under section 12AC(1) of this Act, the person to whom the notice of enquiry was given or his successor." (TMA 1970, s.28ZA(6))

No closure notice whilst referral is on going

"(1)     While proceedings on a referral under section 28ZA of this Act are in progress in relation to an enquiry—

(a)     no partial closure notice relating to the question referred shall be given,

(aa)     no final closure notice shall be given in relation to the enquiry, and

(b)     no application may be made for a direction to give a notice referred to in paragraph (a) or (aa).

 

(2)     For the purposes of this section proceedings on a referral are in progress where—

(a)     notice of referral has been given,

(b)     the notice has not been withdrawn, and

(c)     the questions referred have not been finally determined.

 

(3)     For the purposes of subsection (2)(c) above a question referred is finally determined when—

(a)     it has been determined by the tribunal, and

(b)     there is no further possibility of that determination being varied or set aside (disregarding any power to give permission to appeal out of time)." (TMA 1970, s.28ZD)

Outcome of referral is binding on the parties

"(1)     The determination of a question referred to the tribunal under section 28ZA of this Act is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal.

(2)     The determination shall be taken into account by an officer of the Board—

(a)     in reaching his conclusions on the enquiry, and

(b)     in formulating any amendments of the return required to give effect to those conclusions.

(3)     Any right of appeal under section 31(1)(a), (b) or (c) of this Act may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal." (TMA 1970, s.28ZE)

Referral of questions to Tribunal during an enquiry
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