Validity of enquiry and closure notices

HMRC opened enquiries into two limited liability partnerships under TMA 1970 s 12A and later issued closure notices under TMA 1970 s 28B. The enquiry concerned whether the LLPs were carrying on business with a view to a profit however the instant appeal concerned whether HMRC had opened and closed the enquiry using the correct provisions.

Citing the Court of Session decision in R (oao Spring Salmon and Seafood Ltd) v CIR [2004] Scot CS 39 the LLPs said HMRC had no powers to open an enquiry under s 12AC and therefore there was no valid closure notice under s 28B. If it wanted to open an enquiry into the LLPs’ returns it should have done so under FA 1998 Sch 18 para 24 (corporation tax self assessment). If it decided to enquire into the members’ returns this should be done under...