Nominate your Partner Carefully! 

The ‘nominated partner’ of a partnership is responsible for:

• filing the partnership tax return;
• dealing with matters arising from an enquiry; and
• keeping the other partners informed of the progress of any enquiry.

Crucially (for the other partners), any appeal rights relating to the partnership are conferred only on the nominated partner.

Kelly v HMRC

In Kelly v HMRC [2025] UKFTT 852 (TC), Michael Kelly [MK] was a member of a film partnership (‘Invicta’), income from which was included in his self-assessment tax returns (SATRs). HMRC issued closure notices to Invicta, with a consequential amendment notice for MK’s own SATR. He appealed, but HMRC claimed that the First-tier Tribunal (FTT) had no jurisdiction to hear the appeal, as there was no right of appeal under any relevant sections of the Taxes Management Act 1970. MK argued that HMRC had made two amendments:

• the consequential amendment relating to Invicta; and
• an erroneousincrease in his personal income, duplicating the income from Invicta.

Thus, as a result of this mistake:

• The consequential amendment was a freestanding assessment with right of appeal (under TMA 1970, s 31); or
• alternatively, the appeal was against double assessment on the same income (under TMA 1970, s 32).

FTT Decision

A consequential amendment notice is not a partnership closure notice under TMA 1970, s 31 and is therefore outside the scope of an appeal under section 31(1)(b). Consequential amendments to individual partners’ returns are made under TMA 1970, s 28B(4), to which no appeal rights attach. This was confirmed in Knibbs v HMRC [2019] EWCA Civ 1719. Neither the consequential amendment notice, nor any subsequent correspondence, represented an assessment with appeal rights within TMA 1970, s 31(1)(d) (as the amendments were not an ‘assessment to tax which is not a self-assessment’).

For a right of appeal to exist under TMA 1970, s 32, the taxpayer must make a claim, which HMRC must then refuse; otherwise, no right of appeal to the FTT is created. As there was no appealable decision over which the FTT had jurisdiction, the taxpayer’s appeal had to be struck out.

Penalty Notices for Partnerships

As well as an individual partner having no right of appeal against consequential amendments, they also have no right of appeal against penalty assessments for late filing of a partnership return, even though this default produces a penalty for each partner.

In Dyson v HMRC (2015) UKFTT 131, two individuals (Mr Dyson and Mr Walker) formed a partnership while at university together, with Walker as nominated partner. The partnership ran for a year at a small profit. The partnership return for 2012/13 was filed late, after which HMRC issued to each partner penalties of:

• two amounts of £100 formissing the filing deadline;
• £900 for daily failings; and
• £300 for being over six months late.

Mr Dyson sought to appeal the second and third of these, claiming he had a reasonable excuse, in that he had done all that could reasonably be expected to ensure that Mr Walker filed the partnership return on time. The FTT confirmed that, were Mr Walker to appeal the penalties, it would be treated as an appeal in connection with every penalty payable in respect of the same failure (FA 2009, Sch 55, para 25(5)).

The Tribunal Judge ruled that she was unable to hear Mr Dyson’s appeal, as any appeal must be brought by the nominated partner. This appears to be contrary to the European Convention on Human Rights Article 6, which entitles anyone faced with a criminal charge to a ‘fair and public hearing’. Tax penalties are clearly ‘criminal’ for these purposes.

Practical Tip

Other partners should be aware of their lack of appeal rights in matters dealt with by the nominated partner; if the latter is lax in their duties, it can prove costly.