HM Revenue and Customs

4. Mr V complains that HMRC took too long to reach a decision about his tax liability. He also complains that it has refused to reduce or remove the interest it has claimed on this liability.

5. Mr V says that being told by HMRC after more than 20 years that he owes a considerable sum has been very stressful and upsetting. He explains that it was a huge shock and this has disrupted his sense of stability and affected his emotional wellbeing.

6. He would like HMRC to acknowledge its failings and accept that his case meets the criteria for the interest to be removed.

7. Mr V entered various film sale and lease back partnerships during the 1999/2000 to 2002/2003 tax year period (inclusive). These partnerships allow investors to purchase a finished film and obtain tax relief on their investment. One partner (known as the nominated partner) usually acts as the party responsible for overseeing the partnership’s operations, including their acquisitions, leaseback arrangements and compliance with tax relief rules. This was the case for Mr V’s partnership. We will refer to the nominated party as NP.

8. In August 2001, HMRC started enquiries into the tax returns for the partnership Mr V had entered. It notified NP and sent both it and Mr V a Notice of Enquiry. A Notice of Enquiry is a formal written notification that HMRC intends to examine a tax return to verify its accuracy and compliance with relevant rules.

9. After exchanging correspondence with NP from 2002 onwards, HMRC sent it a formal notice in May 2005. This required NP to provide specific information and documentation. There was a further exchange of correspondence between HMRC and NP for the next four years. HMRC says that while NP provided some information, this was not what it needed.

10. In December 2011, HMRC and NP met in person to discuss the ongoing enquiry. At that time HMRC was involved in legal action in respect of other film sale and leaseback partnerships. It made a settlement offer to NP based on this action. NP rejected this and told HMRC it would provide evidence it had requested.

11. The legal action continued up to 2017. The courts had found in HMRC’s favour throughout, which the company involved in the action had appealed at numerous stages. The Supreme Court refused leave to appeal further in 2017 which brought matters to a conclusion.

12. Based on this, HMRC started to issue closure notices for the partnerships it was making enquiries into. A closure notice is a formal document which brings an enquiry to an end, provides a conclusion and amends any tax returns accordingly. It started to do this in Mr V’s case in November 2019.

13. In March 2024, HMRC confirmed how much Mr V owed and the amount of interest this sum attracted. He complained to it and asked it to consider reducing or removing the interest. HMRC considered this request and determined that, although it had discretion to do this, it would not do so in Mr V’s case. It explained that this was because this did not meet the criteria for this to be done.

14. Mr V remained unhappy with HMRC’s position and asked the Adjudicator’s Office (AO: the second-tier organisation that reviews complaints about HMRC) to consider his complaint. The AO did not uphold this.

Delay

17. The Parliamentary Commissioner Act, 1967 governs how we do our work. Section 6(3) of the Act says a person needs to make any complaint about the service they have received from a government department or agency to an MP in writing within a year of knowing they had cause for complaint. We cannot investigate complaints raised with an MP after one year, unless we can see there is a good reason to do so.

18. Mr V complains that HMRC took too long to reach a decision about his liability for tax. He says it had all the information it needed in 2005, but did not

19. Mr V first contacted an MP about this matter in January 2025. He argues that he only knew about the issue in March 2024 when HMRC told him how much he owed. He therefore believes his complaint is within the legislative time limit.

20. The matter has been ongoing since August 2001 when HMRC issued its Notice of Enquiry. We can see that NP wrote to HMRC to acknowledge this in either January 2002 or January 2004 (the latter date is typed but struck through and the former written by hand in its place). NP told HMRC that it was the correct party to send notices to and that it had ‘written to the individual partners advising them that [it was] dealing with this on behalf of the partnership to try and avoid any misunderstanding’.

21. Section 12AC of the Taxes Management Act, 1970 permits HMRC to notify a partner who has submitted a return. This is ‘deemed to include the giving of notice of enquiry…to each partner who…has made a return’.

22. Given the contact with NP from August 2001 onwards and the relevant law, we think Mr V would, or at least should, have known about the enquiry from this point onwards. This is compounded by the fact NP told HMRC it had notified the relevant partners, which includes Mr V.

23. Additionally, in his supporting documentation to us, Mr V says that at the same time as it wrote to NP, ‘HMRC issued a notice to investors notifying them of the enquiry and that their personal tax returns would be deemed to be under enquiry’. This seems to confirm that he was aware of the enquiry in 2001.

24. Mr V goes on to say that HMRC placed additional tax returns under enquiry in January 2003 and January 2004. He tells us that it notified investors of this but that ‘neither they nor their professional advisors had any reason for concern when they received those notices’.

25. We are therefore satisfied that Mr V was aware of the enquiries from the early 2000s onwards when this issue began.

26. Mr V explains that HMRC sent closure notices for the initial enquiries in November 2019. Given he had known about the enquiries from August 2001, more than 18 years beforehand, and that a closure notice was required to bring the enquiry to an end, we find that he had cause for complaint earlier than March 2024. This date may have been when Mr V knew how much HMRC required him to pay, but it was not when he knew it was taking too long to reach a decision.

27. We would consider it reasonable for Mr V to have had cause to question the time it was taking HMRC to conduct its enquiry much earlier than 18 years later. That said, even if we disregard the length of time that elapsed there, the very latest we could consider Mr V’s date of knowledge being is November 2019. By this point it would be clear that HMRC had taken a long time to reach its decision.

28. The law requires an MP referral within 12 months of knowing there is cause for complaint. Even if we used November 2019 as the starting point, Mr V did not bring the matter to an MP’s attention until more than five years later and four years outside the time limit for doing so. When we asked about this delay, he told us he was completing HMRC’s complaints process. While we acknowledge this, Mr V did not start to complain until March 2024. As we have set out, we are satisfied that he knew he had cause to complain much earlier than this.

29. We have seen no robust reason for us to set aside the time limit and so, while we understand it will be disaointing for Mr V, we will not consider this aspect of his complaint further.

Interest

30. When we decide whether we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen. We have done this and have not found any indications that something has gone wrong in respect of this aspect of Mr V’s complaint.

31.  Mr V asked HMRC to reduce or remove the interest it has applied to his tax bill. HMRC declined to do this, and the AO agreed this was the correct decision. Mr V disputes this and believes his case meets the criteria for HMRC to do this.

32. DMBM405030 is the relevant guidance that HMRC’s decision relies on. This explains that there are circumstances where its Interest Review Unit might decide to give up the interest claimed on a balance. To consider doing this, all five of the following criteria need to be met: • ‘interest was increasing during the period involved, and • HMRC was responsible for the conduct of the case during the period, and • the delay was extensive and unreasonable in the circumstances, and • it was only this delay that caused the absence of payment, and • the customer was not aware that a debt existed, or might arise, that they should have paid or made a payment on account against.’

33. We have focused on the last of these criteria, given that if one is not met, no further consideration is required. The information provided leads us to believe Mr V was aware that a debt might arise. As we have outlined previously, he has confirmed he knew about the enquiries HMRC had opened but did not consider these to be of particular concern. The information HMRC sent to him explained that the enquiry might result in additional tax being due. HMRC also advised that it would claim interest on any such tax due.

34. We acknowledge that Mr V receiving a large bill from HMRC would be worrying and upsetting. This is likely to be compounded by a substantial portion of the sum due being interest charges. While we recognise this, we are satisfied that HMRC has reached the correct decision in saying Mr V’s case does not meet the criteria for DMBM405030 to apply.

35. For this reason, we will not consider this aspect of his complaint further.

1. We have carefully considered Mr V’s complaint about HMRC. We are sorry to hear about the difficulties he has experienced. We have no doubt it would be worrying and upsetting to receive a bill for such a significant sum so long after the period it related to.

2. The complaint about the length of time it took HMRC to conclude its enquiry into Mr V’s tax affairs falls considerably outside our time limit. We have not seen any strong reason for us to set this aside to allow us to look at the matter further. We will therefore not consider this aspect of the complaint further.

3. We have seen that HMRC has considered whether Mr V’s case meets the criteria for the interest charges claimed to be cleared. While we recognise Mr V’s view, we found HMRC has correctly concluded that it does not. Therefore, we will not consider it further.