Investigations under Section 12a Taxes Management Act 1970

Partnerships should be viewed as being a separate entity and in addition to the individual partner entities.

Background

HMRC is entitled to enquire into any partnership tax return. Enquiries into partnerships will either relate to a specific entry(ies) of the self assessment return (an aspect enquiry) or the tax return as a whole (a full enquiry). It applies to the original tax return and any subsequent amendment to that tax return.

As a partner, you need to understand what has gone wrong.

Under self assessment, HMRC does not have to notify the the partnership that the tax return has been accepted and that no enquiries will be made. However, HMRC does have to notify the nominated partner in writing that HMRC intends to enquire into the tax return.

  • Do you know who the nominated partner is?
What action should be taken?

The partnership tax return will have a knock-on effect to the tax returns of the individual partners. When the nominated partner receives notification of an enquiry it is advisable that the partnership tax return concerned is revisited and reviewed again. If any errors or omissions are identified, the nominated partner is advised to notify HMRC of what have been found rather than wait for HMRC to do so. This approach can reduce the level of penalties that may otherwise be imposed.

What liabilities may be due?

The partnership/individual partners may be liable for any underpaid tax. Additionally, National Insurance can become due in certain circumstances although National Insurance is not strictly a tax.

Will there be any other liabilities?

Yes there can be interest on any late payment of tax and potentially a penalty.

Help is at hand

If you would like to discuss this matter further, please contact me at paul@pmc.tax or on 07979 313 010.

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