There is more to Inverclyde than meets the eye
In Inverclyde Property Renovation LLP and another v HMRC  UKFTT 0408 (TCC), the First-tier Tribunal upheld an appeal against closure notices that were issued to two LLPs. The FTT found that HMRC should have enquired into the appellant LLPs’ partnership returns under paragraph 24 of Schedule 18 to FA 1998 regarding corporation tax self-assessment and not s12AC of TMA 1970 for partnerships.
The LLPs stated that they did not rely on any lacuna in the legislation, but it was a straightforward case of HMRC having followed the wrong procedural steps. Moreover, HMRC could still be able to remedy the situation through their powers to make discovery assessments, subject to statutory limits.
If HMRC wanted to challenge the relevant return of any LLP members, they should have opened an enquiry into those members’ own returns under s9A, TMA. The FTT reiterated that a taxpayer will not be prevented from challenging the procedural course adopted by HMRC only because they have accepted incorrectly issued notices of enquiry and the fact that HMRC has used a procedural course for a considerable period does not make it correct.
It is HMRC’s common practice not to open s9A TMA 1970 enquires into the returns of individual partners of LLPs in analogous scenarios. This decision may therefore have a wider impact on other similar enquires.
HMRC has appealed the FTT decision and the UT hearing is on 27 April 2020.
As announced in July of last year, the 2020 Budget introduces a new deferred payment plan option for Corporation Tax charged on profits or gains arising from certain transactions between UK companies and EEA companies of the same group of companies.
Reversal of Inverclyde
The 2020 Budget announced provisions to reverse last year’s FTT decision in Inverclyde. In that case, HMRC denied the appellant LLPs’ claims for Business Property Renovation Allowance on the basis that the LLPs did not carry on a business with a view to a profit.
HMRC nudge letters
HMRC continues to fight the good fight in its quest to cut down on tax avoidance and have recently been issuing further “nudge” letters to taxpayers who may have an income source or assets producing gains overseas and consequently an undisclosed outstanding UK tax liability.
ExxonMobil: FTT Decision Released
The FTT decision in Esso Exploration and Production UK Limited and others v HMRC, which relates to pre-2006 claims for Cross Border Group Relief, has now been released.