Finance Act 1998

Part IVU.K. Enquiry into company tax return

Notice of enquiryU.K.

24(1)[F1An officer of Revenue and Customs] may enquire into a company tax return if [F2he gives] notice to the company of [F2his] intention to do so (“notice of enquiry") within the time allowed.U.K.

(2)If the return was delivered on or before the filing date, notice of enquiry may be given at any time up to twelve months [F3from the day on which the return was delivered (subject to sub-paragraph (6)).]

(3)If the return was delivered after the filing date, notice of enquiry may be given at any time up to and including the 31st January, 30th April, 31st July or 31st October next following the first anniversary of the day on which the return was delivered.

(4)If the company amends its return, notice of enquiry may be given at any time up to and including the 31st January, 30th April, 31st July or 31st October next following the first anniversary of the day on which the amendment was made.

(5)A return which has been the subject of one notice of enquiry may not be the subject of another, except one given in consequence of an amendment (or another amendment) by the company of its return.

[F4(6)In the case of a company which is a member of a group other than a small group, the 12-month period in sub-paragraph (2) shall start not from the day on which the return was delivered but from the filing date.]

[F5(7)In sub-paragraph (6) “group” and “small group” have the same meaning as in sections 474(1) and 383 of the Companies Act 2006.]

Scope of enquiryU.K.

25(1)An enquiry into a company tax return extends to anything contained in the return, or required to be contained in the return, including—U.K.

(a)any claim or election included in the return,

(b)any amount that affects or may affect—

(i)the tax payable by that company for another accounting period, or

(ii)the tax liability of another company for any accounting period,

[F6and also extends to consideration of whether to give the company [F7a notice within sub-paragraph (3)]. But this is subject to the following limitation.]

(2)If the notice of enquiry is given—

(a)as a result of an amendment by the company of its return, and

(b)at a time when it is no longer possible to give notice of enquiry under paragraph 24(2) or (3),

the enquiry into the return is limited to matters to which the amendment relates or which are affected by the amendment.

[F8(3)A notice is within this sub-paragraph if it is—

(a)a notice under section 184G or 184H of the Taxation of Chargeable Gains Act 1992 (avoidance involving capital losses),

(b)a notice under section 81(2) of TIOPA 2010 (schemes and arrangements designed to increase relief), [F9or]

(c)a transfer pricing notice under section 168(1) of TIOPA 2010 (provision not at arm's length: medium-sized enterprise), F10...

F10(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ]

Enquiry into return for wrong periodU.K.

26(1)In the case of a company tax return which it appears to [F1an officer of Revenue and Customs] —U.K.

(a)is or may be a return for the wrong period, or

(b)has become a return for the wrong period as a result of a direction under [F11section 11(3) of the Corporation Tax Act 2009 (power of officer of Revenue and Customs] to direct which accounting date to be used where company carries on several trades),

the power to enquire into the return includes power to enquire into the period for which the return ought to have been made.

(2)A return is a “return for the wrong period” in the following cases.

(3)The first case is where the return is made for a period which is treated in the return as an accounting period, but which is not an accounting period of the company.

(4)The second case is where the return is made on the basis that there is no accounting period ending in or at the end of the specified period, but there is such an accounting period.

(5)In relation to a return for the wrong period the references to the filing date in paragraph 24(2) and (3) (period within which notice of enquiry may be given) are to the date that would be the filing date if the period for which the return was made were a period of the kind it is treated as in the return.

(6)In this paragraph “the specified period” means the period specified in the notice requiring a company tax return.

Notice to produce documents, etc. for purposes of enquiryU.K.

F1227U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Appeal against notice to produce documents, etcU.K.

F1328U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Penalty for failure to produce documents, etcU.K.

F1429U.K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amendment of self-assessment during enquiry to prevent loss of taxU.K.

30(1)If after notice of enquiry has been given and [F15while the enquiry is in progress in relation to a matter] [F1an officer of Revenue and Customs] [F2forms] the opinion—U.K.

(a)that the amount stated in the company’s self-assessment as the amount of tax payable is insufficient, and

(b)that unless the assessment is immediately amended there is likely to be a loss of tax to the Crown,

[F2he] may by notice to the company amend its self-assessment to make good the deficiency [F16so far as it relates to the matter].

(2)In the case of an enquiry which under paragraph 25(2) is limited to matters arising from an amendment of the return, sub-paragraph (1) above only applies so far as the deficiency is attributable to the amendment.

(3)An appeal may be brought against an amendment of a company’s self-assessment by [F1an officer of Revenue and Customs] under this paragraph.

(4)Notice of appeal must be given—

(a)in writing,

(b)within 30 days after the amendment was notified to the company,

(c)to the officer of the Board by whom the notice of amendment was given.

[F17(5)None of the steps mentioned in section 49A(2)(a) to (c) of the Taxes Management Act 1970 may be taken in relation to the appeal before the completion of the enquiry.]

[F18(6)For the purposes of this paragraph, the period during which an enquiry is in progress in relation to any matter is the whole of the period—

(a)beginning with the day on which notice of enquiry is given, and

(b)ending with the day on which a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued.]

Amendment of return by company during enquiryU.K.

31(1)This paragraph applies if a company amends its company tax return at a time when an enquiry [F19into the return is in progress in relation to any matter to which the amendment relates or which is affected by the amendment].U.K.

(2)The amendment does not restrict the scope of the enquiry but may be taken into account (together with any matters arising) in the enquiry.

(3)So far as the amendment affects—

(a)the amount stated in the company’s self-assessment as the amount of tax payable, or

(b)any amount that affects or may affect—

(i)the tax payable by the company for another accounting period, or

(ii)the tax liability of another company for any accounting period,

it does not take effect [F20while the enquiry is in progress in relation to any matter to which the amendment relates or which is affected by the amendment].

This does not affect any claim by the company under section 59DA of the M1Taxes Management Act 1970 (claim for repayment in advance of liability being established).

(4)An amendment whose effect is deferred under sub-paragraph (3) takes effect as follows—

(a)if the conclusions in [F21a partial or final closure notice] state either—

(i)that the amendment was not taken into account in the enquiry, or

(ii)that no amendment of the return is required arising from the enquiry,

the amendment takes effect [F22when a partial closure notice is issued in relation to the matters to which the amendment relates or which are affected by the amendment or, if no such notice is issued, a final closure notice is issued];

[F23(b)in any other case, the amendment takes effect as part of the amendments made by the closure notice.]

(5)For the purposes of this paragraph the period during which an enquiry is in progress [F24in relation to any matter] is the whole of the period—

(a)beginning with the day on which [F1an officer of Revenue and Customs] [F2gives] notice of enquiry into the return, and

(b)ending with the day on which [F25a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued].

[F26Referral of questions to [F27the tribunal] during enquiryU.K.

31A(1)At any time when an enquiry is in progress [F28in relation to any matter relating to] a company’s tax return any question arising in connection with the subject-matter of the enquiry may be referred to the [F29tribunal] for F30... determination.U.K.

(2)Notice of referral must be given—

(a)jointly by the company and [F1an officer of Revenue and Customs],

F31(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)to the [F32tribunal].

F33(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)More than one notice of referral may be given under this paragraph in relation to an enquiry.

(5)For the purposes of this paragraph the period during which an enquiry is in progress [F34in relation to any matter] is the whole of the period—

(a)beginning with the day on which [F1an officer of Revenue and Customs] [F2gives] notice of enquiry into the return, and

(b)ending with the day on which [F35a partial closure notice is issued in relation to the matter or, if no such notice is issued, a final closure notice is issued].

Withdrawal of notice of referralU.K.

31B(1)[F1An officer of Revenue and Customs] or the company may withdraw a notice of referral under paragraph 31A F36...U.K.

F37(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of referral on enquiryU.K.

31C(1)While proceedings on a referral under paragraph 31A are in progress in relation to an enquiry—U.K.

[F38(a)no partial closure notice relating to the question referred shall be given,

(aa)no final closure notice shall be given in relation to the enquiry, and]

(b)no application may be made for a direction to give [F39a notice referred to in paragraph (a) or (aa)].

(2)For the purposes of this paragraph proceedings on a referral are in progress where—

(a)notice of referral has been given,

(b)the notice has not been withdrawn, and

(c)the questions referred have not been finally determined.

(3)For the purposes of sub-paragraph (2)(c) a question referred is finally determined when—

(a)it has been determined by the [F40tribunal], and

(b)there is no further possibility of that determination being varied or set aside (disregarding any power to grant permission to appeal out of time).

Effect of determinationU.K.

31D(1)The determination of a question referred to the [F41tribunal] under paragraph 31A is binding on the parties to the referral in the same way, and to the same extent, as a decision on a preliminary issue in an appeal.U.K.

(2)The determination shall be taken into account by [F1an officer of Revenue and Customs] in reaching [F2his] conclusions on the enquiry.

(3)Any right of appeal under paragraph 30 or 34(3) may not be exercised so as to reopen the question determined except to the extent (if any) that it could be reopened if it had been determined as a preliminary issue in that appeal.]

Completion of enquiryU.K.

32[F42(1)Any matter to which an enquiry relates is completed when an officer of Revenue and Customs informs the company by notice (a “partial closure notice”) that they have completed their enquiries into that matter.U.K.

(1A)An enquiry is completed when an officer of Revenue and Customs informs the company by notice (a “final closure notice”)—

(a)in a case where no partial closure notice has been given, that they have completed their enquiries, or

(b)in a case where one or more partial closure notices have been given, that they have completed their remaining enquiries.

(1B)A partial or final closure notice takes effect when it is issued.]

(2)If [F1an officer of Revenue and Customs] [F2concludes] [F43in a partial or final closure notice] that the return was a return for the wrong period, the closure notice must designate the accounting period for which a return should have been made (specifying the dates on which the period begins and ends).

(3)If there is more than one accounting period ending in or at the end of the period specified in the notice requiring a return, the closure notice shall only designate the first of those accounting periods for which no return has been delivered.

Paragraph 35 provides for a return to be delivered for any other outstanding accounting period.

[F44(4)In the Taxes Acts, references to a closure notice under this paragraph are to a partial or final closure notice under this paragraph.]

Direction to complete enquiryU.K.

33(1)The company may apply to the [F45tribunal] for a direction that [F1an officer of Revenue and Customs] give a [F46partial or final closure notice] within a specified period.U.K.

[F47(2)Any such application is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).]

(3)The [F48tribunal] shall give a direction unless F49... satisfied that [F1an officer of Revenue and Customs] [F2has] reasonable grounds for not giving a [F50partial or final closure notice] within a specified period.

Amendment of return after enquiryU.K.

34[F51(1)This paragraph applies where a [F52partial or final closure notice] is given to a company by an officer.U.K.

(2)The [F53partial or final closure notice] must [F54state the officer's conclusions and]—

(a)state that, in the officer's opinion, no amendment is required of the return that was the subject of the enquiry, or

(b)make the amendments of that return that are required—

(i)to give effect to the conclusions stated in the notice, and

(ii)in the case of a return for the wrong period, to make it a return appropriate to the designated period.

(2A)The officer may by further notice to the company make any amendments of other company tax returns delivered by the company that are required to give effect to the conclusions stated in the [F55partial or final closure notice].]

(3)An appeal may be brought against [F56an amendment of a company's return under sub-paragraph (2) or (2A)].

(4)Notice of appeal must be given—

(a)in writing,

(b)within 30 days after the amendment was notified to the company,

(c)to the officer of the Board by whom the [F57partial or final closure notice] was given.

(5)In this paragraph “the designated period” means the period designated in the [F58partial or final closure notice].

Further return for outstanding periodU.K.

35(1)Where, following an enquiry into a company tax return—U.K.

(a)it is finally determined—

(i)that the return is a return for the wrong period, and

(ii)what the period is for which the return should have been made, and

(b)the effect of the determination is that there is a further period (“the outstanding period") for which a company tax return should have been made under the original notice requiring a return,

then, if there is no such return delivered by the company which can be amended so as to become a return for the outstanding period, the original notice shall be taken to require the company to deliver a return in respect of that period.

(2)The filing date for such a return for an outstanding period is whichever is the later of—

(a)the original filing date, and

(b)the last day of the period of 30 days beginning with the day on which the matters mentioned in sub-paragraph (1)(a) are finally determined.