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HMRC was correct in conducting LLP tax return enquiries under TMA 1970 provisions

By Mark McLaughlin, September 2020

HMRC had the power to open an enquiry into the tax returns of limited liability partnerships under the income tax self-assessment provisions in TMA 1970, s 12AC, and accordingly there had been valid closure notices under TMA 1970, s 28B.

Summary

HMRC had the power to open an enquiry into the tax returns of limited liability partnerships (LLPs) under the income tax self-assessment provisions in TMA 1970, s 12AC, and accordingly there had been valid closure notices under TMA 1970, s 28B.

Background

The two respondent LLPs made claims for business property renovation allowance. HM Revenue and Customs (HMRC) opened enquiries into the LLPs’ tax returns and subsequently issued closure notices concluding that the LLPs were not carrying on a business with a view to profit and therefore were not entitled to claim the allowance. The LLPs appealed. 

One of the LLPs’ grounds of appeal was that

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