HMRC open two enquiries into same return

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Hello,

As the title says, HMRC opened two enquiries (two seperate letters and case references) into a client's 2017-18 return. HMRC have realised their mistake and they are apparently going to close one of the enquiries.

I always understood that HMRC was only allowed to open one enquiry in the enquiry window and once that was finalised, that return was effectively safe from further enquiry.

My question is this: does anyone know where this is implicitly stated in legislation/guidance and are there any case law examples that would aid me in writing to HMRC and saying thank you for your letters but the enquiry has been closed and as such the 'open' enquiry is invalid?

Thanks in advance and apolgies for the excessive use of the words enquiry and enquiries!

Replies (20)

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RLI
By lionofludesch
02nd Feb 2021 16:53

I'm not sure that I'd want to take that stance.

They'll only be back next year. It looks like you have something to hide.

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Replying to lionofludesch:
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By Liam.em
02nd Feb 2021 17:46

I take your point. The issue is it’s an umbrella/loan charge so it’s more than likely that HMRC will be enquiring into future years in any case, so the chance to get one year ‘closed’ may be something we need to pursue.

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ALISK
By atleastisoundknowledgable...
02nd Feb 2021 16:53

Cheeky, but I like your thinking.

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By Tax Dragon
02nd Feb 2021 17:10

By my maths, two open less one closed equals one open.

Or have I missed your point?

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Replying to Tax Dragon:
ALISK
By atleastisoundknowledgable...
02nd Feb 2021 17:34

Tax Dragon wrote:

By my maths, two open less one closed equals one open.

Or have I missed your point?

I believe the logic was ‘there can only be 1 enquiry. When it is shut, that’s it for that year. An enquiry has been shut, ergo the ‘other’ enquiry can’t be valid’.

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Replying to atleastisoundknowledgable...:
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By Tax Dragon
02nd Feb 2021 17:39

So... it was the first enquiry that was shut? Leaving the 'invalid' one in place?

Interesting question. One for the judge?

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Replying to Tax Dragon:
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By Liam.em
02nd Feb 2021 17:42

Yes this was my logic. One to chat through with the partners I think.

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Replying to Liam.em:
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By Tax Dragon
02nd Feb 2021 17:45

But neither enquiry has yet been closed?

In which case there is a valid enquiry currently. (And a non-enquiry.)

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Replying to Tax Dragon:
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By Liam.em
02nd Feb 2021 17:47

I have been informed by the investigator a closure notice for one of them is in the post.

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Replying to Liam.em:
ALISK
By atleastisoundknowledgable...
02nd Feb 2021 18:39

I was going to say it might come down to whether the first was closed or withdrawn, but you’ve just answered that.

I do agree with the early post - this tactic will just be inviting more enquiries.

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Replying to Liam.em:
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By Tax Dragon
03rd Feb 2021 10:07

Liam.em wrote:

I have been informed by the investigator a closure notice for one of them is in the post.

Then your question is of interest if it's the first enquiry that is closed (leaving the non-enquiry open) - a point I made above. In that case, I would be tempted to run your argument. HMRC trips over technicalities all the time, there's no reason not to use that to advantage (I disagree with Lion and ALISK).

However, if the closure is for the second enquiry - the one that can't be an enquiry - the closure notice is as invalid as the enquiry notice, and I think your argument has no legs. Be interested to know, if you're happy to post back.

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Replying to Tax Dragon:
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By Tax Dragon
03rd Feb 2021 10:11

Tax Dragon wrote:

a point I made above.

Not clearly, I now see. Sorry.

The gap between what's in my head and what comes out of my fingers in here seems to be widening. (And I have only thirty minutes to notice and close such gaps! Oh please don't tell me I agree with Justin on this, because Justin is wrong.)

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paddle steamer
By DJKL
02nd Feb 2021 17:22

https://www.gov.uk/hmrc-internal-manuals/self-assessment-legal-framework...

Condition for making enquiry: taxpayer must be notified
The only condition that the officer of the Board must satisfy before commencing an enquiry is that he must give the taxpayer written notice of his intention to enquire into the tax return.

If the tax return is not selected for enquiry within the specified time limits HMRC do not normally have the right to open an enquiry at any later date. The tax return and its associated self assessment will be treated as ‘final’. (But see Enquiries after time limit for notice of enquiry has elapsed in SALF404.)

HMRC are under no obligation to give notice that a particular tax return has been accepted and that no enquiries will be made.

Section 9A(3)

Only one notice of enquiry may be issued in respect of any tax return or amendment.

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Replying to DJKL:
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By Liam.em
02nd Feb 2021 17:43

Thanks. I came across that manual earlier but was unsure if it was something that would hold up in tribunal. I know cases have fallen on the ‘that was only guidance’ argument even when it was guidance issued by HMRC!

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By Wanderer
02nd Feb 2021 18:01

Cue a 'discovery'.

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Replying to Wanderer:
Stepurhan
By stepurhan
03rd Feb 2021 11:34

I concur that HMRC would be likely to try this. However, discovery is only valid if they have additional information they were originally missing. Seems unlikely to apply on the facts given, so that could be struck down too.

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By richard thomas
03rd Feb 2021 11:51

Your understanding of the law was quite correct. I don't understand why you wanted to know where there was an "implicit" statement that this was the law - wouldn't asking if there was an "explicit" statement have been more sensible?

There is an easy way to found out if there is an explicit statement in the law and that is to examine the law. You've actually done the next best thing by consulting SALF. This is unusual as an HMRC Manual because it is actually designed to expound the law, and not just HMRC's take on it.

Don't all accountancy practices have access to the law, through LexisNexis or CCH/Kroner?

The passage from SALF quoted by DJKL has the words "Section 9A(3)" above the relevant passage. This is, as would have been clear from the context of SALF as a whole, a reference to s 9A(3) Taxes Management Act 1970 (TMA), the "explicit statement" you are after.

It follows that only the first in time letter is a valid notice of enquiry. The second in time is a nullity. If HMRC's closure notice refers to the first in time notice then that is the end of the enquiry: if it refers to the second it cannot be a closure notice, and certainly not a closure notice in relation to the first notice of enquiry.

Suppose HMRC do accidentally close the only valid enquiry. Can they subsequently make a discovery assessment? First they have to make a discovery, not a high hurdle to overcome. Second it must not be stale (see Tooth). Third, they have to show that the conditions in s 29(5) TMA apply, that at the time they closed the enquiry they could not have been aware of the loss of tax.

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Replying to richard thomas:
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By Liam.em
03rd Feb 2021 12:36

Thank you for your detailed response.

Yes you're correct re: my faux pas over the use of implicit. I blame the education system and January exhaustion.

That makes logical sense. We have access to the materials you noted, however this is the first time I have come across this type of potential HMRC error (I have dealt with timing issues but not this) and I must admit I was unsure where to start, hence my post.

I will post further updates once the closure notice has been received.

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Replying to Liam.em:
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By Tax Dragon
03rd Feb 2021 13:01

January imhaustion?

(That's what I blame my sense of humour on, anyway.)

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Replying to richard thomas:
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By Liam.em
03rd Feb 2021 12:37

.

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