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.