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HMRC enquiry

Second opinion

A client, a business partnership (husband and wife), had an enquiry opened by HMRC in November 2015. It was for two tax years, 2012-13 and 2013-14. The wife has a limited company, and through the enquiry, the tax inspector mentioned that she may look into the limited company too because it is connected. Now the tax inspector has comed back and one of the points, apart from trying to arrange a meeting to bring matters to an end, is 'regarding our previous references to linked company kindly let me have a copy of the company accounts to Y/E – 31/3/16'. The financial year does not correspond to the years of enquiry into the partnership.

Initially the partnership paid for some of the expenditures of the company, as the company did not have the cash, and then the company has been paying back to the partnership. This was part of the reason for the tax inspector to consider looking into the company at the start of enquiry.

I am looking for a second opinion on whether it is right for HMRC to do that without opening a formal enquiry into the company, and whether I can object to that, and if so, on what grounds? Any constructive view or opinion is appreciated.

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05th Nov 2017 18:03

The thing is, do you want to push them into opening a formal enquiry ? If no, it might be an idea to play along.

Much depends on whether you concede that this line of enquiry is justified. I'd be asking exactly why they're asking - do they have a genuine concern or are they fishing ?

There's not really enough in your query to be more definite. You mention some company expense from the partnership - that's not enough to ask for the company's accounts for me.

Thanks (1)
By Ruddles
05th Nov 2017 18:09

If the Inspector wants to see the company accounts only, refer him to the accounts submitted with the company’s tax return.

If he wants to see anything else then ask him to open an enquiry. Bearing in mind that the company may be a third party in relation to the partnership and the Inspector may already have the power to obtain specific information relating to transactions between the two.

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05th Nov 2017 18:14

Thank you for two replies. They are in line of what I thought.
The only thing that got me wondering was the fact the inspector has asked for the accounts for the year ended 31/03/2016, which does not correspond with the years of the enquiry in the partnership.
I also agree with the fact that the accounts were submitted with HMRC so they already have that information.
I reapply appreciate your contributions to my question

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