![TC09593 - [2025] UKFTT 00892 (TC)](https://backend.juristeca.com/files/emisores/logo_7HSuEAV.png){kind=logo}
The facts
The facts
On 31 March 2011, a Mr Andreas Roald, a director of Sovereign Film Investments Ltd, as a promoter, gave notice to HMRC's Anti-Avoidance Group of its intention to offer individuals the opportunity to undertake a trade of exploiting film rights via an LLP structure. It was stated that it was anticipated that a loss may arise during the first accounting period.
Coronation Film Partners LLP was incorporated under the Limited Liability Partnerships Act 2000 on 4 April 2011.
The Partnership had six partners; five natural persons (Messrs Attwood; Costello; Cowan; Devlin; and Dr Khurana) and a legal person - Sovereign Corporate Ltd ('SCL').
SCL's registered office was at 38 Esplanade, St Helier, Jersey.
The Partnership's self-assessment tax return for the accounting period from 4 April 2011 to 5 April 2011 (ie, one day) was signed and filed by SCL on 12 October 2011. The enquiry window was therefore open until 12 October 2012.
A net loss of £1,804,315 was declared. SCL was identified as the nominated partner.
On 11 May 2012, HMRC's Specialist Investigations office sent several letters, including:
A letter to "Sovereign Films Ltd as Nominated Partner for Coronation Film Partners LLP" ('the Defective Letter');
A letter to "Company Secretary" of Sovereign Corporate Ltd, at its correct Jersey address ('the Company Secretary Letter'). This is a very important letter. It is at page 132 of the bundle;
A letter to Malde and Co, who were the authorised agents for Coronation Film Partners ('the Malde Letter').
Correspondence between HMRC and Malde and Co, and (from February 2013) PWC ensued.
On 13 September 2016, Mr Clarkson, then of Trident Tax Ltd, and writing on behalf of Coronation Film Partners LLP, wrote to HMRC informing them that he had been appointed by the partnership, and all its partners, to review its tax affairs. He wrote as follows:
"[...] I have retrieved a letter dated 11 May 2012 which, I fear, may be mistaken for an enquiry into the partnership for the year ended 5 April 2012.
The letter is addressed to Sovereign Films Ltd 'as nominated partner' for the Coronation Film Partnership. As your records will show Sovereign Films Ltd is neither nominated partner nor indeed a partner at all in the aforementioned partnership. In the circumstances I do not believe any enquiry has been raised into the partnership [...]"
That obviously refers to what we have described as 'the Defective Letter'. It makes no reference to any other letter; in particular, it makes no reference to the Company Secretary Letter.
On 21 August 2017, Mr Clarkson, on behalf of the Partnership, applied to the Tribunal for an order that HMRC close its enquiry. That application was on the footing that no valid enquiry had been opened. That application does not seem to have reached a hearing. It seems to have been overtaken by the issue of the Closure Notice in dispute.
On 8 May 2018, Mr Roald, on behalf of SCL, authorised Mr Clarkson to act on the Partnership's behalf in respect of all open enquiries, assessments and appeals.
On 27 September 2018, HMRC issued a Closure Notice to SCL under section 28B Taxes Management Act 1970 ('TMA 1970') for the tax year ending 5 April 2011.
The Closure Notice concluded that losses reported in the Appellant's Partnership return for that year were overstated by £1,804,315; and the Partnership's loss figure was amended to £zero.
Mr Clarkson challenged the Closure Notice, in time; it was upheld at departmental review on 3 September 2021, but that letter was sent by HMRC to the wrong address.