Partners bound by agreement

Loss claims must be made in a tax return

The taxpayers were partners in several limited film partnerships. After an enquiry into the partnerships’ returns and a hearing before the First-tier Tribunal the partnerships and HMRC reached a compromise agreement under which losses at a reduced level from those claimed were allowed (TMA 1970  s 54 ‘Settling of appeals by agreement’). HMRC then wrote to the partners explaining that their individual returns would be amended to reflect the lower losses.

The partners applied for judicial review but the Upper Tribunal refused. The partners appealed. They said their claims to carry back losses should not be regarded as made in a tax return. Instead they were stand alone claims into which HMRC could enquire under TMA 1970 Sch 1A para 5(1). Since no enquiry had been made within the relevant time no further enquiry was allowed.

Lady Justice...