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Previously the FTT held that if a limited liability partnership (LLP) is found to not be trading with a view to a profit, it is in effect a corporate entity and therefore should have filed a company tax return. Therefore, it found that an enquiry into the partnership return filed by such an LLP was void and the accounting period was closed without an enquiry. HMRC appealed this finding.

The Government subsequently introduced Clause 101 of the Finance Bill 2020 to retrospectively reverse this decision.

In a decision issued on 27 May 2020, the Upper Tribunal has now also upheld HMRC’s appeal. In that decision, it confirmed that such enquiries would not rendered a nullity by a finding during that enquiry that the incorrect return had been filed.

The tribunal therefore re-made the decision, holding that the closure notices were validly issued and that there is no basis in law for striking out the appeals. The tribunal’s decision in Inverclyde has therefore now been both negated y legislation and overturned on appeal.