Appropriate enquiry

The taxpayers claimed trading losses from investments in film partnerships. HMRC disputed the claims.

A settlement was reached under TMA 1970 s 54 whereby the Revenue allowed reduced amounts of losses.

The taxpayers wished to carry back the higher amount and sought judicial review.

They said their carry-back claims were made not in a personal tax return but should be considered as standalones to which sch 1A applied. HMRC had not carried out an enquiry under sch 1A para 3(1) and para 5(1) within the time limit and were therefore out of time to challenge the claims.

The Upper Tribunal said the tax department had conducted a legitimate and appropriate enquiry into the partnership returns which had automatically amounted to an enquiry into the taxpayers’ self assessment returns. It was generally more appropriate to carry out an enquiry such a waym rather than under sch...