COM71090 - Enquiries: CTSA enquiries: closing an enquiry: non-contract settlements
This subject is presented as follows
Interaction with Jeopardy Amendments
See subjects ‘Making Jeopardy Amendments’ (COM71040) and ‘Appeals Against Jeopardy Amendments’ (COM71050).
Amendment anticipating conclusions in a Closure Notice
See subject ‘Taxpayer Amendments’ (COM71020).
Para 32 Closure Notice
You must issue a Closure Notice (Word 28KB) to the company at the end of every enquiry under CTSA, unless you intend to seek a contract settlement. (See the Enquiry Manual at EM3831, EM3950 onwards and also subject ‘Closing An Enquiry: Contract Settlements’ (COM71120)).
An enquiry is treated as finished when you
- Give written notice of completion to the company
- State your conclusions (Para 32 Sch 18 FA 1998)
Para 34 Amendment of return after enquiry
Enquiries concluded on or after 1 April 2010
The Closure Notice takes effect when it is issued and amends the return
- To give effect to the conclusions stated in the notice, and
- In the case of a return for the wrong period, to make it a return appropriate to the designated period. (Paragraph 34 Sch 18 FA 1998, as amended by Section 119 Finance Act 2008)
If you conclude that the return under enquiry was for the wrong period, you will need to change the COTAX record to show the correct AP before issuing your Closure Notice with Revenue Amendment. (For more information, see subject ‘Enquiry Into Return For The Wrong Period’ (COM71060).)
Where there is more than one AP ending in or at the end of the period specified in the notice requiring the return, the Closure Notice will only show the first of those APs for which no return has been made. (For more information and an example, see the Enquiry Manual at EM3885 - EM3886.)
Paragraph 35 provides for a return to be delivered for any other outstanding period (Word 28KB). If the company does not make a return for the outstanding period, you should make a Paragraph 37 determination. (See subject ‘Revenue Determinations’ (COM23170) in the ‘Assessing’ business area.)
You can 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 closure notice. (Paragraph 34 (2A) Sch 18 FA 1998).
Enquiries concluded before 1 April 2010
Paragraph 34 Sch 18 FA 1998 was amended by Section 119 Finance Act 2008 for enquiries ended on or after 1 April 2010. Different closure procedures applied to enquiries concluded before 1 April 2010. A company had 30 days from the issue of the Closure Notice to amend its return. If the company failed to do so within that time limit, or if the amendment was not satisfactory, HMRC had a further 30 days in which to amend the return.
Right of Appeal
The company can appeal against a Revenue Amendment, and the normal rules for appeals and postponement applications apply. It can then negotiate further, settle under Section 54 TMA, ask for a review, or notify the appeal to the Tribunal (Word 34KB). (Para 34 (3) and (4) Sch 18 FA 1998).
The facility to agree a contract settlement for all outstanding liabilities will most often apply to those cases involving liability to penalties as well as additional tax. (See the Enquiry Manual at EM6000 onwards and subject ‘Closing An Enquiry: Contract Settlements’ (COM71120)).
Computer action
When an enquiry results in an amendment to an original return (CT600 Sections 3 to 6) you use Function RAMA, ‘Prepare a Closure Notice with Rev Amdt’ option, to issue the Closure Notice.
Screen COT121N shows a full computation of the existing tax charge, capital allowances and any losses, etc. as shown on the return or as amended by any later amendments. You can adjust the figures to reflect the outcome of the enquiry.
COTAX will issue this computation to the company, with messages explaining that
- It is the formal enquiry Closure Notice
- The figures reflect your conclusions
- It amends the return to give effect to the conclusions stated in the notice
Note: If you issue a manual Closure Notice and Revenue Amendment (because the wording of the standard COTAX Closure Notice does not suit your case) you will need to record your Revenue Amendment on COTAX later. See subjects ‘Closing an enquiry: Manual closure notices’ (COM71093) and ‘Revenue Amendments’ (COM71110).
Example Form
You can see an example of the COTAX-issued Closure Notice with Revenue Amendment in COM by following these steps
- Select Index Of Forms, from the menu bar on the left of the screen
- Use the scroll bar to find CT620, then [CT620(CLO)]
- Select the hyperlink. Acrobat Reader opens and displays the example form
For a list of forms relevant to this subject, see COM71021.
For a list of functions to use in particular situations, see COM71011.
For legislation applying to this subject, see COM71012.
