[2009] UKFTT 335 (TC)

TC00276

Appeal number: SC/3021/2009

INCOME TAX – preliminary hearing - partnership taxation – whether a partnership existed – whether ex-partner bound by nominated partner’s partnership returns

FIRST-TIER TRIBUNAL
TAX  CHAMBER

	RAYMOND JOHN PHILLIPS	
Appellant

	- and -

	THE COMMISSIONERS FOR HER MAJESTY’S
	REVENUE AND CUSTOMS 	
Respondents

				TRIBUNAL: 	Barbara Mosedale

Sitting in public in Manchester on 7 August 2009

Mr Adams of Lindley Adams, accountants, for the Appellant

Mr Colin Smith, officer of HMRC, for the Respondents

© CROWN COPYRIGHT 2009

DECISION

1.	The Appellant appealed against assessments raised against him for tax years 1998/99, 1999/2000, 2000/1, 2001/2, and 2002/3 and against amendments to his self-assessment returns for 2001/2 and 2003/4.   The total claimed by HMRC is in excess of £270,000.  The Appellant and HMRC agreed that there were two preliminary issues which might determine the appeal:
•	Whether there was a partnership; and
•	If there was a partnership whether the Appellant can appeal against consequential assessments and amendments made in relation to his own returns following assessments and amendments made in respect of partnership returns.  
Background to the dispute
2.	The Appellant had been a member of a partnership and had retired from it in around 1996.  He set up Phillips Architects Ltd (“PAL”) which was his solely owned and controlled company.
3.	Mr Bintliff, his alleged partner, traded for a number of years as an architect under the name “Studio Baad”.  In about August 1996 he came together with the Appellant to pursue architectural work on a joint basis.  HMRC contend that this formed a partnership, at least by year 1998/99.  The Appellant does not accept that their relationship was one of partnership.
4.	A draft unsigned joint venture agreement between Mr Bintliff and PAL dates to 3 December 1996.  There were further discussions in Spain in April 1998 and further  draft heads of term produced.  Although the parties disagreed over whether there was an oral agreement for partnership it is clear that they are agreed that there was no written agreement for partnership or joint venture.
5.	The relationship ended in dispute in around April or May 2003.  It seems that in March 2003 a part of Studio Baad – the healthcare division – was sold to another firm of architects for a substantial sum of money.  Mr Bintliff asked for and got the Appellant’s consent to the sale but the Appellant says he was not told the price or given any of the sales proceeds. The Appellant terminated the relationship on 16 May 2003 when he received no reply from Mr Bintliff to his enquiry about the sales monies relating to sale of the healthcare division. 
6.	Then the Appellant initiated court proceedings against Mr Bintliff claiming that there was a partnership and that therefore he was entitled to a share in certain assets (such as the healthcare division) on the grounds they were assets of the partnership.
7.	The proceedings did not reach court but were settled by the parties on the basis of a Tomlin order.  This is a consent order given by the High Court.  The only copy produced to the Tribunal was undated but from the evidence was probably signed in 2006.  The effect of the order was that Mr Bintliff paid the Appellant approximately £250K (which included some £50K in costs).
8.	HMRC opened an enquiry into the partnership tax returns for Studio Baad for the year ended 5 April 2002 on 16 January 2004.  They wrote to the nominated partner (Mr Bintliff), the Appellant and the partnership’s accountants (Hacker Young) on this date.  The letter to the Appellant made it clear that HMRC were sending him the notification because it affected his personal tax return which was to be treated as being under enquiry because the partnership return was under enquiry.  
9.	The Appellant’s representative wrote to HMRC on 22 January 2004 to point out they were the nominated agents for the Appellant and correspondence in respect of his affairs should be sent to them. HMRC’s reply acknowledged this but went on to say that they would not correspond over partnership matters as they were corresponding with the nominated partner (Mr Bintliff) and the partnership’s accountants (Hacker Young).
10.	Lindley Adams replied on 2 March 2004 pointing out that Mr Bintliff and the Appellant were in legal action against one another in respect of Studio Baad, that although Mr Bintliff was the nominated partner in the past he was not in respect of the current situation, and that the Appellant was adamant that no action was taken in respect of Studio Baad which would adversely affect him without his agreement.
11.	HMRC acknowledged this letter on 9 March 2004.  They noted the legal action between the two parties and said “I will tread very carefully in any actions I take with regards to the partnership tax affairs”.  It went on to say that HMRC were currently only obtaining and reviewing partnership records and would be addressing their queries on them to the partnership accountants who had prepared them.  The last paragraph read “Obviously if anything arises in the future which could in any way affect Mr Phillips then I will contact you first before taking any action and will keep you fully informed.”
12.	On 17 January 2005 HMRC wrote to Mr Bintliff notifying him that they would also be enquiring into the partnership returns, and his own returns, for year ended 5 April 2003.  On 27 January 2006, HMRC wrote to Mr Bintliff and Hacker Young notifying him that they were opening an enquiry into the partnership return for the year ended 5 April 2004.
13.	HMRC agreed various amendments to the partnership accounts with Hacker Young.  They notified Mr Bintliff of these (as nominated partner) on 12 August 2008.  On 19 August they went on to issue closure notices to Mr Bintliff with amended partnership statements.  
14.	Shortly afterwards HMRC made the assessments and amendments on the Appellant which are the subject of this appeal.  The Appellant appealed on 6 October 2008.  He also requested postponement of payment of the tax.  He elected for his appeal to be heard before the Special Commissioners but in fact of course it has come on for hearing before the First-tier Tribunal (Tax Chamber) since the abolition of the Commissioners.
Status of the evidence
15.	Although the first point in issue was whether there was a partnership and clearly evidence from the alleged partners would be highly relevant to this, neither of the alleged partners gave evidence.  The Appellant did not appear:  his representative, Mr Adams of Lindley Adams, informed me that he was working abroad in China or Dubai and it was not possible for him to attend.  HMRC did not call Mr Bintliff, his alleged partner, as a witness.  This meant most of the evidence in front of the tribunal was second-hand.
16.	The evidence in front of the tribunal comprised:
•	evidence given by the taxpayer’s representative in his presentation, which in the large part appeared to be repeating information given to him by his client and was therefore hearsay;
•	the Tomlin order which brought the litigation between the Appellant and Mr Bintliff to an end;
•	the statements made by the Appellant and Mr Bintliff in their pleadings in that litigation;
•	other documents including accounts and tax returns.
Estoppel?
17.	Although the copy of the Tomlin order before me was unsigned and undated neither party suggested that it was not a true copy of it and I therefore have proceeded on the basis that the copy of the draft in front of me was identical in terms to the actual Tomlin Order.  In it the High Court (Leeds District Registry) ordered that “the proceedings in the main action between the Claimant [the Appellant] and Defendant [Mr Bintliff]….are stayed and save for the purposes of enforcing the terms set out in the Schedule for which purpose there shall be permission to apply.”  Under it, Mr Phillips also withdraw his counter-claim against the Appellant.  
18.	The Schedule  does not include an explicit finding that there was a partnership but nevertheless is written on the assumption that there was a partnership.  The first clause states “….references to the ‘the business’ are references to the partnership of Studio Baad which includes the Claimant Ray Phillips … and Defendant Philip Bintliff.”  The terms of the settlement was the payment of £192,500 and costs by Mr Bintliff to the Appellant.
19.	I considered whether the Tribunal is bound to find that there was a partnership because of the doctrine of res judicata or estoppel by record.  This doctrine is that a matter that has already been decided by a court cannot be re-litigated.  I asked the parties about it in the hearing and although neither party addressed me on the issue, they stated that they did not consider it decisive in this case.  I said I would ask for representations from them if I came to a contrary conclusion but I have decided that the estoppel point is, as stated by Mr Adams, a red herring.
20.	Most importantly, although it appears the doctrine of estoppel by record does apply to consent orders, I do not think it can apply to matters in the schedule of a Tomlin order.  The court only makes the main part of the order:  the schedule is merely agreed between the parties.  Tomlin orders are considered in the Civil Procedure Rules at paragraph 40.6.2 where it says “It is important to remember that the terms in the schedule are not part of the order as such….Essentially, a Tomlin Order records terms of settlement agreed between the parties but those terms are not ordered by the court and are not enforceable as a judgment, at least not without a further order.”
21.	Therefore I conclude that the Appellant is not prevented (‘estopped’) from arguing in his tax appeal that there was no partnership even though he consented to a schedule in a Tomlin Order which assumed that there was a partnership.  I would also add that it is not clear to me that even had I decided that the Tomlin Order had ruled  that there was a partnership, that HMRC would be able to rely on estoppel by record as the Tomlin Order was only between the Appellant and Mr Bintliff.
22.	My conclusion is that the Tomlin order would not prevent me from making a finding that there was no partnership:  nevertheless the fact that the Appellant consented to the Tomlin Order which effectively found that there was a partnership is relevant (but not conclusive) to the question of whether there was a partnership.
The pleadings
23.	The pleadings in the civil case which gave rise to the Tomlin Order were also put in evidence by HMRC and by the Appellant.  These comprised the Appellant’s amended particulars of claim dated 11 October 2005, Mr Bintliff’s amended defence dated 4 November 2005, and the Appellant’s amended reply and defence dated 21 November 2005.
24.	I considered the status of these documents.  The tribunal is not bound by the same rules of evidence as courts of law:  the tribunal may “admit evidence whether or not the evidence would be admissible in a civil trial in the United Kingdom” (Rule 15(2)(a) of the Tribunal Procedure (First-tier Tribunal)(Tax Chamber) Rules 2009.
25.	The evidence in the pleadings is hearsay being written statements made by parties not present in the hearing of this case. Under Rule 15 cited above,  this Tribunal can hear  hearsay evidence, and indeed since the Civil Evidence Act of 1995, all civil courts have in any event been able to admit hearsay evidence subject to some safeguards.  The question is what weight should attach to this evidence.
26.	Written hearsay evidence is less satisfactory evidence than oral evidence from witnesses in front of the tribunal largely because the writer is not available to be examined and cross-examined on what he said.  Therefore when considering the evidence in the pleadings I bear in mind:
•	the Appellant chose not to attend the hearing.  Where the case that his representative put forward at the hearing differs from what the Appellant said in his pleadings for the earlier civil case, I bear in mind that it is the Appellant’s choice not to attend to explain this difference and present himself for cross examination on why his evidence may have changed.  
•	the Appellant’s motive in his pleadings was no doubt to achieve the highest possible monetary settlement and Mr Bintliff’s motive was no doubt the opposite:  the pleadings may therefore be inherently unreliable and I am therefore more inclined to rely on the pleadings where the Appellant’s evidence is consistent with Mr Bintliff’s evidence.  
27.	My conclusion is that much of the evidence presented to me is unsatisfactory.  HMRC has assessed the Appellant to tax.  This is a preliminary hearing in the appeal against that assessment.  The burden of proof is on the Appellant to show that on the balance of probabilities the assessments should be reduced:  T Haythornwaite & Sons Ltd v Kelly CA 1927, 11 TC 657.  Where I find the evidence unsatisfactory one way or the other, this will make it hard for the Appellant to discharge his burden of proof.
Was there a partnership?
28.	The first issue is whether there was a partnership between the Appellant and Mr Bintliff for the years under assessment 1998 - 2003.  If there was no partnership, the Appellant cannot be bound by assessments made against the non-existent partnership.  HMRC have assessed the Appellant on the basis that a partnership existed.  The Appellant wishes to displace that assessment and it is therefore for him to satisfy me on the balance of probabilities that a partnership did not exist. 
29.	A partnership is given a statutory definition in the Partnership Act 1890 s1(1):
“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.”
30.	The Partnership Act sets out guidance in section 2 on how to determine whether a partnership exists.  I have set out the text in the Appendix to this Decision Notice in so far as is relevant.  In summary, it says that “the sharing of gross returns does not of itself create a partnership” (s2(2)) but that “the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business” (s2(3)).
31.	It is therefore very relevant whether Mr Bintliff and the Appellant shared revenues, and if they did, whether it was an agreement to share gross revenues (which would be a joint venture and not a partnership) or an agreement to share net revenues, which is prima facie evidence of a partnership.
32.	The Partnership Act makes it clear from the sub-sections (a)-(e) of section 2(3)(see the appendix) that sharing profits does not necessarily mean that there is a partnership:  it is only prima facie evidence.  These sub-sections are examples, not necessarily exhaustive, of when profit sharing would not amount to a partnership, such as where the relationship is one of employee/employer but the wages are based on the business’ profits.
Did they share net profit?
33.	The evidence given by Mr Adams at the hearing was that the Appellant accepted that there was a business carried on with a view to profit.  He did not accept that it was carried on in common. In his view, Mr Bintliff and the Appellant shared net profits but not in the way to give rise to a partnership.  
34.	Looking at what the Appellant said in the civil court pleadings, it seems he drew a distinction between the position for the two years to August 1998,  and the position from August 1998 to 2003.  His Amended particulars of claim filed on 22 September 2005 make the claim (paragraph 1) that the relationship 1996-1998 was a partnership or a joint venture.  From 1998 he claims that the relationship was a partnership and makes no alternative claim that it may have been a joint venture (paragraph 2).  He claims that the partnership arose either by oral agreement or simply because they met the criteria of the Partnership Act in particular because they divided profits.
35.	The appellant states in his Amended Particulars of claim that:
“the profits of the said partnership were to be divided equally between [Mr Bintliff] on the one hand and [the Appellant] save that it was agreed that (at the direction of the Claimant) part or all of his share of the profit could be paid to him via [PAL].”
36.	The Amended Particulars of Claim also included the claim that the assets of the partnership were to be shared equally.
37.	Mr Bintliff denied that the profits of the partnership were shared.  His explanation of the relationship was that there was a joint venture between himself and PAL.  Nevertheless, he later then consented to the Tomlin order which stated that the relationship was one of partnership.  He also agreed to pay a large sum of money to the Appellant in satisfaction of his claim.
38.	On the basis of the consistency of what Mr Adams said in the hearing with the Appellant’s statements in his Amended Particulars, and with the Tomlin Order, I find that profits and not merely revenue were shared between Mr Bintliff and the Appellant.  This is prima facie evidence of partnership between Mr Bintliff and the Appellant.
The cases on partnership
39.	However, as stated above, that does not end the matter.  Other evidence can displace the prima facie evidence of partnership and Mr Adams was of the opinion that it did.  He suggests the relationship between Mr Bintliff and the Appellant was one of principle and agent or of employer and employee, which are of course some of the exceptions  given in s2(3) Partnership Act.  
40.	Both parties cited cases to me which they considered helped their case.  Mr Adams considered that the Court of Appeal decision in the case of Walker v Hirsh (1884) 27 ChD 460 helped his client.  In that case (as in this) the name of the business was not changed when the alleged partner came on board.  He shared profits (as in this case) but was not held out as a partner and was not given the authority of a partner, and his share of the profits was in addition to a salary.  The court concluded he was not a partner.  I do not consider that the case does help Appellant as most of the facts are quite different.  In particular, although the sharing of profit was held to be prima facie evidence of partnership as is now the position under the Partnership Act 1890, in that case this prima facie finding was displaced by the terms of the agreement which showed that the contract was meant to be one of employment and in particular included the payment of a fixed salary.  These factors are not present in this appeal.
41.	Mr Adams also considered the High Court decision in Horner v Halstead [1995] 67 TC 439 helped his client.  This again was a case of an employee paid a share in profits.  He was treated in some respects as a partner, although his name was not on the headed notepaper.  He had the status of a partner within the firm, management responsibility, and was held out to clients as a partner, although in some other respects was treated as an employee.  As a matter of law he was ineligible to be a partner in that partnership.  The decision that he was an employee by the Special Commissioners was upheld on appeal.
42.	Although there was prima facie evidence that there was a partnership because of the sharing of profits, the court decided on the particular and unusual facts of that case, and in particular that a finding that he was a partner would have resulted in an illegality that under the Companies Act, that there was no partnership.  I think it is also relevant that it is clear that the unusual arrangements were intended to give the Appellant in that case the status of a partner without him actually being a partner.    
43.	In this case we are considering the relationship between Mr Bintliff and the Appellant.  The special features in the Horner v Halstead case are lacking.  There is no evidence of illegality were a partnership to have existed, nor evidence that Mr Bintliff and the Appellant specifically intended not to create a partnership.
44.	HMRC cited two cases, Morden Rigg & Co and R B Eskrigge & Co v Monks (1923) 8 TC 450 and Fenston v Johnstone (1940) 23 TC 29 as showing that a partnership can exist even if the parties do not intend there to be one.  I do not think that these cases are particularly relevant on the facts of this case as there is no evidence that the Appellant and Mr Bintliff had positively decided not to be in partnership.
The facts
45.	letterhead  Part of Mr Adams’ case was that had there been a partnership there would have been Studio Baad headed paper showing both Mr Bintliff and the Appellant as partners.  He said, presumably on this client’s instructions, that there was no such letterhead.  His client, of course, was not present to be examined or cross examined on this.
46.	Mr Adams showed that during the period under assessment invoices were issued by Studio Baad which do not show the Appellant as a partner. There was an invoice dated 25 March 1998.  It was issued by Studio Baad.  The Principle was expressed to be Philip J Bintliff and gave the name of one associate, a Philip J Milson. The invoice relates to upgrading an operating theatre.  The Appellant’s name appears no where on it.
47.	An invoice dated 4 June 2001 was produced – again as the customer was an NHS trust.  As before, only Mr Bintliff was shown as a principle with no mention of the Appellant.  There are four other invoices showing substantially the same, dated 21 June 2002, 14 November 2002, 31 March 2003 and 3 April 2003.  All of them relate to healthcare.  HMRC’s view was that they were issued by the healthcare part of the Studio Baad business which was treated separately by Mr Bintliff, and indeed the sale of that arm of the business was what triggered the dispute and the termination of the business relationship between the two men.
48.	Mr Adams also produced a letter written by Appellant to a client of PAL saying that Studio Baad will now execute the commissions.  It is dated 6 March 1997 on Studio Baad headed paper and like the later invoices it shows Philip J Bintliff as principle and Philip J Milson as associate.  The Appellant writes to the client “I now work with Studio Baad on a full-time basis”.  This letter is also inconsistent with the existence of a partnership in 1997, but, as stated above, the critical dates for the appeal are 1998-2003, so this letter is of little relevant as it does not show that the parties were not in partnership by 1998.
49.	In his Amended Defence Mr Bintliff at paragraph 10 states as “It is admitted that lately….the business letterhead has been revised to describe the parties as partners.  These matters reflect the preference and instructions of [the Appellant] rather than any agreement or understanding between the parties and it is denied that they create a partnership in place of the original joint venture”.  In his  Reply to Defence the Appellant states “It is denied that no material changes to the conduct of the business of Studio Baad occurred after April 1998, and the Claimant will point to – a) the new letter head declaring the Claimant to be the partner of the Defendant in the business.”  The Appellant went on to say “If it be the Defendant’s case that it was the claimant who organised the change to the letterhead of the stationary used by ‘Studio Baad’ so that he and the Defendant were held out as partners in the business of ‘Studio Baad’, then this is denied.  The Claimant will say that this change was organised by the Defendant’s daughter, and will deny that he gave her any such instruction”.
50.	My conclusion is that although I find the disputed evidence from the pleadings unsatisfactory for the reasons given above, it seems that the parties agreed with each other that the letterhead was changed to show both the Appellant and Mr Bintliff as partners in Studio Baad. The argument centred around who instructed the change to the letterhead:  both parties agreed that it was changed to that a partnership existed between the two of them.  It is not clear when the letterhead was changed although it must have been changed at some point during the period under assessment.  It is also clear that at least in respect of the healthcare part of the business, other letterhead, not showing the Appellant as a partner, was in use as well.
51.	Power to bind?  Mr Adams said that the Appellant could not bind the firm.  He said the Appellant did not have the authority to buy and sell on behalf the partnership.  Contracts were signed solely by Mr Bintliff. The evidence he gave to support this was that the Appellant was not a signatory on Studio Baad’s bank account.  This was also stated in the Appellant’s Amended Particulars of Claim and HMRC accepted that this was the case.  HMRC’s view, however,  was that not being a signatory on the bank account was not inconsistent with the Appellant being a partner. 
52.	Mr Adams referred to section 5 of the Partnership Act as showing that partners do have authority to bind the partnership.  Section 5 reads as follows:
“5 Power of partner to bind the firm
Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.”
53.	This means that where as a matter of law there is a partnership partners do have power to bind the partnership vis-à-vis third parties:  however, as can be seen from the words “unless the partner so acting has in fact no authority” it is assumed in the statute that as between the partners themselves they can chose to limit their authority.  And indeed as HMRC point out it is quite normal in larger partnerships for only some partners to be signatories on the bank account.  Therefore if in fact the Appellant had no power to bind the firm, this is not necessarily inconsistent with the existence of a partnership.  
54.	My conclusion on this issue is, firstly, that the Appellant was not a signatory on the bank account but that that is not inconsistent with the existence of a partnership.   I do not find it proved that the Appellant did not in general have power to bind the firm.  All I have is Mr Adams’ hearsay evidence to the contrary effect.  No doubt he is repeating accurately what he was told by his client, but his client is shown to have a variable view of what actually happened: his pleadings claim there was a partnership but his case in this Tribunal is that there was not. Further, it is clear there is conflict between Mr Adams’ hearsay evidence to the tribunal and the consistent evidence of the Appellant and Mr Bintliff in their pleadings on the existence of the letterhead (see above).  My conclusion – and I stress that I do not mean this as any criticism of Mr Adams who was only repeating what he was told - is that I do not find Mr Adams’ hearsay evidence on what happened during the partnership to be reliable.  It is for the Appellant to prove to the tribunal that he did not in general have power to bind Studio Baad and I find that he has failed to do this.  There is simply no reliable evidence on this point.  In any event, as stated above, lack of power to bind is not necessarily inconsistent with the existence of a partnership.
55.	Lack of trust  Mr Adams maintained that a partnership involves free exchange of information and the appellant was not given access to business information about Studio Baad.  This claim also pervades the Amended Particulars of Claim. As example, Mr Adams said that Mr Bintliff kept Studio Baad’s financial records at home and the Appellant did not have access to them.  He did not meet the bank manager for Studio Baad.  The Accountants for Studio Baad (Hacker Young) would not share information with the Appellant before or after the dispute.  HMRC did not challenge this evidence.  I find, however, that this secretiveness by Mr Bintliff is not necessarily inconsistent with the existence of a partnership:  merely that Mr Bintliff’s actions may well have given the Appellant a good reason to terminate any partnership that existed, and indeed, ultimately this is what he did.
56.	Competition.  Mr Adams said that Mr Bintliff and the Appellant (and their wholly owned companies) competed with Studio Baad.  This was reflected in the schedule to the Tomlin Order.  Such competition was in Mr Adams’ view incompatible with the existence of a partnership.  Section 30 of the Act states:  
“30 Duty of partner not to compete with firm
If a partner, without the consent of the other partners, carries on any business of the same nature as and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.”
57.	However, the fact that the partners did compete with Studio Baad does not mean that there was no partnership:  a partner should not do this and must hand over the proceeds as per section 30 above but it does not necessarily mean that there was no partnership.  And indeed the parties agreed in the Schedule to the Tomlin Order that there was a partnership despite both parties having competing interests.
58.	Sharing losses?  Mr Adams said that the agreement was to share profits but not losses and that this was inconsistent with partnership. However, I do not find this contention proved.  As stated above, I do not find Mr Adams’ hearsay evidence to the tribunal on what happened during the partnership to be reliable and therefore I do not find that the Appellant has proved this point.
59.	Professional indemnity insurance  PAL had professional indemnity policy.  Mr Adams produced in evidence the professional indemnity insurance for PAL for 1/8/98-31/7/99.  His point was that the Appellant’s wholly owned company would not require insurance if in fact the Appellant did his work through Studio Baad.  I do not find this a convincing argument.  PAL may have needed insurance for run-off work, and/or because it was still active as well as Studio Baad, and/or because it was billing Studio Baad for a share of the Appellant’s profits of Studio Baad as appeared to be the arrangement between the two parties or it may have held the insurance without actually needing it.  The fact PAL held insurance does not mean that there was no partnership between Mr Bintliff and the Appellant.
60.	Warranty deed  Mr Adams also put in evidence an architects warranty deed which was signed by Mr Bintliff.  It is an unexecuted copy, undated and unsigned by the counterparty.   The deed is said to be between the customer and “the persons named in the First Schedule to this Deed being the present equity partners in the firm of Studio Baad….”  The first Schedule names only Mr Bintliff and it is only Mr Bintliff who has signed. 
61.	However,  I accept HMRC’s point that the deed was drawn up on 5 December 1997 which was during the earlier stages of the relationship and before HMRC is contending there was a partnership.  Even the Appellant in his Amended Particulars of Claim claimed only a partnership or joint venture in the alternative for 1996-1998.  I do not find the insurance policy relevant to the question of whether there was a partnership in the periods being assessed (1998-2003).  
62.	VAT registration Mr Adams said that he also believed that the VAT registration for Studio Baad was actually a VAT registration in the sole name of Mr Bintliff, and complained that HMRC had neither confirmed nor denied this despite being given the opportunity to look into this.  As HMRC did not contest this, and they were uniquely in a position to do so, I conclude that Studio Baad’s VAT registration was solely in Mr Bintliff’s name.  However, I do not find this strong evidence against the existence of a partnership:  no one disputed that Studio Baad was Mr Bintliff’s business before the relationship between the two men came into being and Mr Bintliff may simply have let the registration in his sole name to continue.  This does not mean that there was no partnership.
63.	Previous bad experience  Mr Adams also mentioned that the Appellant had previous to his connection with Studio Baad been involved in another partnership that had ended badly and would have been reluctant to enter into another partnership.  This may be true but does not mean that the relationship which he formed with Mr Bintliff was not a partnership.
64.	Profit share  Mr Adams also mentioned that the Appellant did not get a 50:50 share in the profits on the basis that PAL was providing services for which it was paid.  However, it seems that both Mr Bintliff and Appellant agree in the pleadings that this was an arrangement by which the Appellant could extract his share of the profits and indeed when monies invoiced by PAL are taken into account it amounts to close to a 50:50 split.  In any event, a split of profits which is not equal is not inconsistent with partnership.
65.	Sale of heathcare  Both parties are agreed that Mr Bintliff sought the Appellant’s consent to the sale of the healthcare part of Studio Baad.  This is consistent with Mr Bintliff believing that Studio Baad was a partnership between him and the Appellant.  However, it seems he then did not account to the Appellant for any of the sale proceeds and this triggered the ending of their relationship.  My conclusion is that this is not particularly strong evidence on the question of whether before this happened there was a partnership.
66.	Views of the Appellant and Mr Bintliff  Another point made by Mr Adams’ is that he considers the Tribunal should discount the views of the Appellant expressed in his Amended Particulars of Claim that a partnership existed 1998-2003 on the basis that the Appellant is not a lawyer and cannot be expected to know what in law amounts to a partnership.  I agree that the Appellant’s views are unreliable and I am disregarding views expressed since the ending of the relationship as he is clearly prepared to take a stance contrary to an earlier opinion when it is in his interest to so do:  the Appellant claimed there was a partnership when suing Mr Bintliff for a share in the business’ capital, and now when there is a tax assessment he is maintaining that there is no partnership.  However, I consider that any view the Appellant expressed during the period in question (1998-2003) and in particular before the dispute with Mr Bintliff took place is of more relevance:  even if a non-lawyer might not understand all the nuances of the statutory definition of partnership, I think a businessman can be expected to have a fair idea of whether he is in business with another person with a view to making money.  I take account of the views of the Appellant when considering the relevant of the tax returns (see below).
67.	Partnership tax returns  Partnership returns were submitted by Studio Baad for years 1998/9 through to 2003/4.  For the earlier years the returns themselves were not produced in evidence.  The returns for years 2001/2 onwards were produced.  Mr Bintliff signed the 2001/2 return.  In answer to the question “Are the details on the front of the Partnership Tax Return wrong?” there is a tick in the “No” box. In the signature box and immediately above the signature are the pre-printed words:
“the information I have given in this Partnership Tax Return, as the nominated partner, is correct and complete to the best of my knowledge and belief”
68.	The partnership return for 2002/2003, however, in Box 3.116 “additional information”, contained the following statement:
“I have to submit provisional accounts rather than incur penalties.  I do not accept the designation of partnership which does not change the reality that it is a joint venture.”
The return was signed by Mr Bintliff on 29 January 2004.  
69.	The existence of partnership returns is of value in showing that, Mr Bintliff the signatory of them, believed at the time that it was correct to make a return on the basis that the relationship was a partnership.  It seems between January 2003 and  January 2004 he changed his mind.  This was at a time, of course, when he was in dispute with the Appellant over the existence of the partnership and in particular whether he was liable to account for some of the sale proceeds of the healthcare part of the Studio Baad business.  And as stated above, the conclusion of those proceedings was that he accepted the existence of a partnership and paid a substantial sum in settlement to the Appellant.
70.	Partnership Accounts  Accounts for the partnership were produced by UHY Hacker Young, Chartered Accountants and four sets of these accounts were produced in evidence by HMRC.  The last three, for years 2000/01, 2001/02 and 2002/03 all show that they were drafts produced on 11 May 2005 and therefore I do not find them of any use in showing whether or not a partnership actually existed 1998-2003 as they were produced after the partnership, if it existed, had ceased.  They do show that  Hacker Young, who all seem to agree acted on Mr Bintliff’s instructions, and were still acting during the tax investigation, were instructed to produce partnership accounts for the years in question.  
71.	The first set of accounts produced in evidence, also drawn up by Hacker Young, cover the year 1999/00 and are dated 12 December 2001.  The partners are listed as “P J Bintliff” and “R J Phillips”.
72.	I find that this is relevant as it shows that during the period in question not only did Mr Bintliff instruct the accountants to produce partnership accounts, but that the Appellant was aware of this.  Mr Adams at the hearing said that the first time that they had sight of the accounts was in HMRC’s bundle for the hearing before me:  and while that may very well be correct for the later draft accounts, the Appellant was aware of the existence of partnership accounts as in his Amended Statement of Claim one of his claims is that “the existence of said partnership is confirmed by the existence of partnership accounts.”  So I find that he was aware of the existence of partnership accounts, and this was most likely to be from around when the accounts were signed in 2001.
73.	Appellant’s tax returns  Of even more relevance is the Appellant’s own tax returns from the period under assessment.  HMRC produced in evidence the capture of the Appellant’s return for 1999/00 and a copy of his partnership pages from this tax return.  This shows the Appellant to be employed by PAL and to be a partner in partnership reference number 4359133856.  I find this to be a reference to Studio Baad as, firstly, this was the evidence of HMRC at the hearing which Mr Adams did not dispute, but also partnership returns for Studio Baad for later years use this same number.  The figures in the two returns are consistent:   the partnership return for the same year shows profit of £13,736 allocated to the Appellant, and the Appellant returns this identical figure on the partnership pages of his personal tax return. This should have been filed by the Appellant early in 2001 but according to a handwritten note was filed in late 2001.
74.	For tax return 00/01 the Appellant’s tax return for the same partnership shows a profit share of £11,059.58 which matches the one shown in the partnership return for the same period and for the reasons given in the paragraph above I find that the Appellant made his return on the basis he was a partner in Studio Baad.  There was no evidence before the Tribunal on when this was filed.
75.	For tax return 2001/02 again the Appellant’s tax return for the same partnership shows a profit share of £7,604 which matches the one shown in the partnership return for the same period and for the reasons given in the paragraph above I find that the Appellant made his return on the basis he was a partner in Studio Baad.  This return was filed on 30 January 2003.
76.	The later returns were made after the relationship had ended and when the parties were in dispute with each other.  For 02/03 the Appellant’s tax return shows a profit share of £60,580 (for accounting period 1/5/01-30/4/02) which matches the one shown in the partnership return for the same period.  No reference number is given on this one but there was no suggestion that it was a different partnership to the one for the tax returns for the year before and the year afterwards and therefore I find that the Appellant made his return on the basis he was a partner in Studio Baad.  This return was filed on 26 March 2004.
77.	For 03/04 the Appellant’s tax return shows a profit share of £15,620 (for accounting period 1/5/02-30/4/03).  Again the reference is 4359133856 which matches the one given on the Studio Baad partnership tax return.  For reasons not explained to me the partnership return shows a loss.   It may be that the Appellant estimated his profit share:  but what is clear is that he made his return on the basis that he was a partner in Studio Baad in 2002/03.  The filing date for this return is not given but must have been after the dispute with Mr Bintliff had commenced.
78.	In summary I find that during the currency of the alleged partnership, and before the dispute with Mr Bintliff, the Appellant made at least one return, and probably three,  on the basis that he was a partner in Studio Baad and in the knowledge that partnership returns were made by Mr Bintliff.  Returns since the dispute but which relate to the period in question were also completed by the Appellant on the basis that he was a partner.  
Conclusions on first issue
79.	As stated above I have found that the Appellant and Mr Bintliff shared net profits and that that is prima facie evidence of the existence of a partnership between them.  It is for the Appellant to show other evidence to refute this prima facie evidence and my conclusion is that he has failed to do this.
80.	On the contrary the evidence of the returns shows that at the time of the relationship 1998-2003 both alleged partners considered that there was a partnership as they made tax returns on this basis.  Further at some point in the relationship they adopted letterhead which represented to third parties that they were partners, although this letterhead was not used for the healthcare part of the business.  There is evidence that their relationship was not completely open and formed on the sort of trust one might expect in a partnership but this does not mean that there was not a partnership.
81.	My conclusion is that the Appellant has failed on the balance of probabilities to displace the prima facie evidence that a partnership existed for the years under assessment.  Therefore in answer to the first preliminary issue my finding is that for the years under assessment the Appellant was in partnership with Mr Bintliff and was a partner in Studio Baad.
Are the partnership returns binding?
82.	Having resolved the first preliminary point against the Appellant, I move on to the second which is whether the Appellant, as a partner 1998-2003 in Studio Baad is bound by the amendments to the partnership tax returns.  
83.	Mr Adams made the point that although (if there was a partnership) it was clear in the period 1998-2003 Mr Bintliff was the nominated partner, the relationship ended acrimoniously in 2003 and therefore Mr Adams considered that Mr Bintliff at that point ceased to be the nominated partner and HMRC should not have agreed the amendments with Mr Bintliff without reference to the Appellant.
84.	Mr Adams case is also that the Appellant has been treated most unfairly.  HMRC are assessing him on partnership profits and denying him the chance to challenge the correctness of the assessment.  One allegation, which as this is a preliminary hearing is not for me to decide, is that Mr Bintliff has agreed amendments with HMRC which bring income into account which is not properly partnership income with a view to reducing his own tax liability.
85.	Not only do HMRC say that the Appellant cannot challenge the correctness of the assessment, he has been denied access to the business records which would be necessary in order for him to make a challenge. Mr Adams says, and HMRC do not dispute, that at least since the relationship break-up, and indeed before, Mr Bintliff has denied the Appellant access to the Studio Baad books.  Many of the documents that the Appellant’s advisers have seen have been made available to them by HMRC and not by Mr Bintliff or Hacker Young.  
86.	HMRC’s case is that the scheme of the legislation is that HMRC need only deal with the nominated partner, which in this case was Mr Bintliff.  No other partner is liable to make a partnership return and (in their interpretation of the law) no other partner can appeal against an assessment made on the partnership or any amendment made by HMRC to the partnership return.
87.	HMRC consider that there are good policy reasons for such a scheme in the legislation.  HMRC cannot negotiate individually with all the partners in a partnership:  HMRC needs a single reference point.  Partners should resolve disputes among themselves and not involve HMRC:  HMRC is not a referee, and should not be drawn into partnership disputes.
88.	There is also the point that in a case such as this one, were I to agree with the Appellant, that it could lead to a failure to collect all taxes due.  This is because, if the Appellant is right and (I am looking at this hypothetically) too much income has been treated as partnership income when it should have been treated as Mr Bintliff’s sole income, this would lead to a decrease in the tax liability on the Appellant in his appeal.  But it is probably too late for HMRC to re-open the assessment on Mr Bintliff.
The law
89.	A partner does not have joint and several liability for tax on the partnership profits:  each individual partner is liable for the tax on his own share of the profits.  This is set out in S111 Taxes Act (as in force at the dates relevant in this appealCHECK):
“111 Treatment of partnerships
(1)	Where a trade or profession is carried on by persons in partnership, the partnership shall not, unless the contrary intention appears, be treated for the purposes of the Tax Acts as an entity which is separate and distinct from those persons.
(2)	So long as a trade or profession is carried on by persons in partnership, and any of those persons is chargeable to income tax, the profits or losses arising from the trade or profession (“the actual trade or profession”) shall be computed for the purposes of income tax in like manner as if-
(a)	the partnership were an individual; and
(b)	that individual were an individual resident in the United Kingdom.
(3)	A person’s share in the profits or losses arising from the actual trade or profession which for any period are computed in accordance with subsection (2) above shall be determined according to the interests of the partners during that period.”

90.	Nevertheless, in order to calculate the tax liability s111 provides that first the profits of the partnership must be calculated as if for a natural person liable to tax.  Only once this is done can the profits then be divided between the partners in accordance with their share.
91.	The Taxes Management Act therefore makes provision for partnerships to make tax returns.  The legislation relating to partnership returns is contained in section 12AA, s12AB, s12AC, s28B, s30B, and s31 Taxes Management Act 1970 which  is set out in so far as relevant in the appendix to the appeal.  Most of the  legislation was in force 1998-2003 although a few amendments were made in 2001 which are retrospectively in force.
92.	The clear scheme of section 12AA is that there should only be one nominated partner.  That partner is determined by rules set down in a notice of HMRC, or failing that, is a partner chosen by HMRC.  It is the nominated partner who is  responsible for completing the return.  In this case, both parties are agreed that up to the end of the partnership in 2003, Mr Bintliff was the nominated partner for Studio Baad and responsible for submitting the tax return.
93.	On 16 January 2004 HMRC opened an enquiry under s12AC into the 2001/2002 partnership return.  On 17 January 2005, they opened an enquiry into the 2002/2003 partnership return, and then on 27 January 2006 into the 2003/2004 partnership return. 
94.	The closure notices and amendments for the partnership returns were issued to Mr Bintliff as nominated partner on 19 August 2008.  At the same time HMRC also raised discovery assessments against the partnership for the years 1999/2000 and 2000/2001 under s30B TMA 70.Closure notices under S28B and 28A and assessments under s29 were issued to the Appellant on 23 September 2008. The Appellant’s agent lodged an appeal against the personal notices and assessments on 6 October 2008, although it is clear that the grounds of appeal included one that the assessments against the partnership were wrong.
95.	 It was agreed by both parties that HMRC engaged only with Mr Bintliff and the partnership accountants (Hacker Young) in their enquiries and disputes and in particular did not discuss the matter at all with the Appellant or his agent despite being notified on 2 March 2004 of the dispute between Mr Bintliff and the Appellant.
96.	It is clear that HMRC were correct to continue to treat Mr Bintliff as the nominated partner even after the partnership ceased.  The plain words of s12AC TMA are that the notice of enquiry is to be given to the “partner who made and delivered the return, or his successor”.  Mr Bintliff was the person who made and delivered the returns in question.
97.	S12AA(11) indicates that there is only a  “successor” where the nominated partner is no longer available.  In this case Mr Bintliff was still available so there was no question of there being a successor.  In any event, there was no one else nominated by the partners (being at by this point in disagreement with each other and no longer in partnership) and so it would be for HMRC to nominate the successor under s12AA(11)(b)(ii). Clearly they chose to continue to treat Mr Bintliff as the nominated partner and this amounts to a nomination if one were needed (which I do not think it was).
98.	 In respect of the discovery assessments, the notice of amendment must be given to the partner who made the return.  Section 30B(1) reads “…as regards a partnership statement made by any person (the representative partner)….[HMRC] may…by notice to that partner so amend the partnership return…”.  The representative partner is Mr Bintliff as he filed the returns for those years. So our finding is that even after the partnership ceased to exist, Mr Bintliff remained the nominated partner in relation to the returns made by the partnership. This means that HMRC were right to give the notice of amendment to Mr Bintliff.
99.	HMRC’s case is that is therefore the end of the matter.  They consider it is implied that as HMRC only need to deal with the nominated partner in respect of returns, notices and assessments that it therefore follows (even though the legislation is silent on the point) that only the nominated partner can make an appeal against a partnership assessment or amendment.   
100.	Section 31 TMA 70 gives the rights of appeal.  Under s31(1)(d) the Appellant can appeal the discovery assessments made against him for the years ended 1999, 2000, 2001, 2002, and 2003. Under s31(1)(b) TMA there is a right of appeal against “any conclusion stated or amendment made by a closure notice under section 28A or 28B of this Act….”  So an appeal can be brought by the Appellant against amendments to his returns for the years 2002 and 2004.
101.	HMRC say that these appeals can not reopen the issue of the correctness of the assessments and amendments in relation to the partnership return. HMRC put the case for how administratively difficult and complicated it would be for HMRC if they could not confine their dealings over the tax of a partnership to the nominated partner.  I accept that there is much in what they say on this, but I do not think that it is a correct representation of the law.
102.	Firstly, as a matter of statutory construction, there is nothing to expressly limit the Appellant’s appeals against his own tax liability. Section 31 TMA 70 gives a taxpayer the right of appeal:  nowhere in the Act does it limit that right to say that liability to tax on the profits of a partnership can only be appealed by the nominated partner.  It is true that the scheme of the Act (as noted above) is that HMRC’s point of reference with the partnership is the nominated partner.  But s31 does not limit the right of appeal to the nominated partner.
103.	In particular, under s31(1)(b) TMA there is a right of appeal against “any conclusion stated or amendment made by a closure notice under section …28B of this Act….”  So an appeal can be made both against the amendment to the partnership returns under s28B(2) and the consequential amendments to the partners’ returns under s28B(4).  S31 does not specify who can make an appeal but it must be the case that the taxpayer has the right to take the appeal against consequential amendments to his own tax return.  
104.	The position is not quite so straightforward in relation to discovery assessments made under s30B – although none it seems were made in this case.  Unlike s31(1)(b) which gives a right of appeal against any amendment made by a closure notice, s31(1)(c) only gives a right of appeal against an amendment “…of a partnership return under s30B(1)…”.  It does not give a right of appeal against consequential amendments to the partners’ returns made under s30B(2).  But this does not mean that a partner has no right of appeal:  I think any partner could appeal the amendment of the partnership return. 
105.	As stated above, the TMA does not specify who can exercise a right of appeal.  S31 merely says “An appeal may be brought….”  Clearly not everyone can bring a right of appeal against any assessment to tax.  It is a general rule that anyone wanting to bring an appeal must show that they have in law a sufficient interest in the matter.  The latin tag for this is “locus standi”.  There have been a number of VAT cases where locus standi has been considered and, not surprisingly, in the context of an indirect tax where the burden of the tax can fall on the taxpayer’s customer as well as the taxpayer, the Tribunal has decided in many cases that the customer does have locus standi, such as in Williams and Glyn's Bank Ltd v C & E Comrs (1974) VTD 118.
106.	In my view a partner does have a sufficient legal interest in an amendment to a partnership return under s30B as it leads automatically to an amendment to his personal tax return.  He can therefore exercise the right of appeal under s31 against assessments of the partnership or amendments to partnership returns.
107.	Although it was not mentioned at the hearing, I have also considered the European Convention for the Protection of Human Rights and Fundamental Freedoms and in particular Article 1 of that Convention.  Section 3 of the Human Rights Act 1998 requires all UK legislation to be read in a way which is compatible with Convention rights in so far as possible.  Article 1 of the Convention provides:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions.  No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties”
108.	The exemption from Article 1 for the state to raise taxes is very broad.  However, it seems to me while the Convention permits the raising of taxes, it only permits taxes to be raised in accordance with the laws of the signatory state.  It therefore follows that under the Convention a taxpayer must have the right to challenge whether he is being taxed in accordance with the law, and the tribunal to which that appeal is made must have the right to determine whether that tax is imposed in accordance with the law.
109.	The same point could be made by reference to domestic constitutional law and in particular the 1688 Bill of Rights which only permits taxes to be levied by Act of Parliament, as it provides "That levying money for or to the use of the Crowne by [pretence] of prerogative without grant of Parlyament for longer time or in other manner than the same is or shall be granted is illegal."   It follows that a taxpayer must have the right to challenge whether he is being taxed in accordance with the law as set down by Parliament, and therefore the Tribunal to which an appeal is made must have the right to determine whether the tax assessed by HMRC was imposed in accordance with the law.
Conclusions on second issue
110.	In summary, a partner who is not the nominated partner can bring an appeal against a consequential amendment of his own return under s28B(4) because s31(1)(b) gives him this right.  He can also appeal any assessment made against him because s31(1)(d) gives him this right.  I also conclude that those appeals can put in issue the correctness of any assessment of a partnership in which the taxpayer is a partner, or the correctness of any amendment to a partnership return. This follows because, firstly, there is nothing in the Act to limit the scope of the taxpayer’s appeal.  Secondly, as stated above, a contrary conclusion would not be consistent with the European Convention for the Protection of Human Rights and Fundamental Freedoms or the Bill of Rights.  Thirdly, as stated above, it seems the Taxes Management Act would allow any partner to appeal against an assessment or amendment against the partnership itself.
111.	I note also that on a related (but not identical issue) of whether a partner is bound by the partnership return when submitting his own self-assessment return, the Tribunal in the recent decision of Morgan & Self TC/2009/ 00046 considered (obiter) that the partner is not so bound.  In particular, the Tribunal was of the view that although the partner must put in the correct boxes the information showing his share of the profits from the partnership return, he has the right to declare (by supplementary information) what he considers is the correct amount of tax due from him.  My view in this case that any partner has the right to appeal assessments against him in relation to his liability to tax on his partnership share is, I think, consistent with the views expressed in Morgan & Self. 
112.	This is only a preliminary hearing and I was not asked to decide on the correctness or otherwise of the partnership returns so I do not attempt to answer the question of whether the amendments to the partnership returns agreed by Mr Bintliff with HMRC and the consequential assessments on the Appellant and amendments to his own returns were correct:  the question was whether as a matter of principle the Appellant has the right to challenge them.  I have decided that he does have this right.  It is therefore for the Appellant and HMRC to reach an agreement or if they cannot to  revert to the Tribunal which will then consider the correctness of the actual amendments and assessments which were made.  
113.	The Appellant and the Respondents have a right to apply for permission to appeal against this decision pursuant to Rule 39 of the Rules.   The parties are referred to “Guidance to accompany a Decision from the First-tier Tribunal (Tax Chamber)” which accompanies and forms part of this decision notice.

Barbara Mosedale

TRIBUNAL JUDGE
RELEASE DATE: 24 November 2009

Appendix of legislative provisions

The Partnership Act

2 Rules for determining existence of partnership
In determining whether a partnership does or does not exist, regard shall be had to the following rules:
(1)     Joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof.
(2)     The sharing of gross returns does not of itself create a partnership, whether the persons sharing such returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived.
(3)     The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business; and in particular—
(a)     The receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such:
(b)     A contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such:
(c)     A person being the widow, widower, surviving civil partner or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such:
(d)     The advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such. Provided that the contract is in writing, and signed by or on behalf of all the parties thereto:
(e)     A person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such.
Taxes Management Act 1970 (TMA 70)
The following provisions of the TMA 70 (which are only set out in so far as relevant) were either in force during the period 1999-2003, or were brought into force by the Finance Act 2001 in relation to returns whether made before or after the passing of the Finance Act 2001 and whether relating to periods before or after the passing of Finance Act 2001.
12AA Partnership Return
(1)	Where a trade, profession or business is carried on by two or more persons in partnership for the purpose of facilitating the establishment of the following amounts, namely – 
(a)	the amount in which each partner charge\able to income tax for any year of assessment is so chargeable and the amount payable by way of income tax by each such partner, and 

…..,

an officer of the Board may act under subsection (2) or (3) below (or both).

……

(2)	An officer of the Board may by a notice given to the partners require such person as is identified in accordance with the rules given with the notice or a successor of his- 
(a)	to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and 

(b) 	….

(3)	an officer of the Board may be notice given to any partner require the partner or a successor of his – 

(a)	to make and deliver to the officer in respect of such period as may be specified in the notice, on or before such day as may be so specified, a return containing such information as may reasonably be required in pursuance of the notice, and

(b)  	…..

And a notice may be given to any one partner or separate notices may be given to each partner or to such partners as the officer thinks fit.

……

(10A)	 In this Act, a “partnership return” means a return in pursuance of a notice under subsection (2) or (3) above **

(11)	In this Act “successor”, in relation to a person who is required to make and deliver, or has made and delivered, a partnership return**, but is not longer available, means – 

(a)	where a partner is for the time being nominated for the purposes of this subsection by a majority of the relevant partners, that partner; and

(b)	where no partner is for the time being so nominated, such partner as – 

(i)	in the case of a notice under subsection (2) above, is identified in accordance with rules given with that notice; or

(ii)	in the case of a notice under subsection (3) above, is nominated for the purposes of this subsection by an officer of the Board;

and “predecessor” and “successor”, in relation to a person so nominated or identified, shall be construed accordingly.

(12)	for the purposes of subsection (11) above a nomination under paragraph (a) of that subsection, and a revocation of such a nomination, shall not have effect in relation to any time before such notice of the nomination or revocation is given to an officer of the Board.

(13)	In this section “relevant partner” means a person who was a partner at any time during the period for which the return was made or is required, or the personal representatives of such a person.

12AB Partnership return to include partnership statement

(1)	Every partnership return shall include a statement (a partnership statement) of the following amounts, namely –

(a)	in the case of the period  in respect of which the return is made and each period of account ending within that period – 

(i)	the amount of income or loss from each source which, …. Has accrued to or has been sustained by the partnership for the period in question

(ia)	the amount of the consideration which, on that basis, has accrued to the partnership in respect of each disposal of partnership property during that period,

		……

(b)	in the case of each such period as is mentioned in paragraph (a) above and each of the partners , the amount which, on that basis and (where applicable) taking into account any such relief or allowance, is equal to his share of that income, loss, consideration, tax or credit.

…..

12AC Notice of Enquiry

“(1)	an officer of the Board may enquire into a partnership return if he gives notice of his intention to do so (“notice of enquiry”) –
(a)	to the partner who made and delivered the return, or his successor,

(b)	within the time allowed.

(2)	The time allowed is –

(a)	if the return was delivered on or before the filing date, up to the end of the period of twelve months after the filing date;

	…………

………….

(6)	the giving of notice of enquiry under subsection (1) above at any time shall be deemed to include the giving of notice of enquiry – 

(a)	under section 9A(1) of this Act to each partner who at that time has made a return under section 8 …. of this Act or at any subsequent time makes such a return, or

………”

“28B Completion of enquiry into partnership return
(1)	An enquiry under section 12AC(1) of this Act is completed when an officer of the Board by notice (a ‘closure notice’) informs the taxpayer that he has completed his enquiries and states his conclusions.
In this section “the taxpayer” means the person to whom notice of enquiry was given or his successor.
(2)	A closure notice must either – 
(a)	state that in the officer’s opinion no amendment of the return is required, or
(b)	make the amendments of the return required to give effect to his conclusion.
…….

(3)	where a partnership return is amended under subsection (2) above, the officer shall by notice to each of the partners amend – 

(a)	the partner’s return under section 8 or 8A of this Act, or
(b) ….

so as to give effect to the amendments of the partnership return.

………..

30B Amendment of partnership statement where loss of tax discovered
(1)	where an officer of the board or the Board discover, as regards a partnership statement made by any person (the representative partner) in respect of any period – 

(a)	that any profits which ought to have been included in the statement have not been included, or 

	(b)	that an amount of profits so included is or has become insufficient, or

	……..

the officer or, as the case may be, the Board may, subject to subsections (3) and (4) below, by notice to that partner so amend the partnership return as to make good the omission or deficient or eliminate the excess.

(2)	Where a partnership return is amended under subsection (1) above the officer shall be notice to each of the relevant partners amend – 

(a)	the partner’s return under section 8 or 8A of this Act, or

….

31 appeals: right of appeal
(1)	An appeal may be brought against – 
(a)	any amendment of a self-assessment under section 9C of this Act….
(b)	any conclusion stated or amendment made by a closure notice under section 28A or 28B of this Act….
(c)	any amendment of a partnership return under section 30B(1) of this Act….
(d)	any assessment to tax which is not a self-assessment.
………..