When HMRC opens an enquiry into a partnership return, it is treated as opening an enquiry into every partner’s own return too, for the partnership items. One letter can therefore draw in all the partners. Tax investigation insurance pays the accountant’s fees for defending the partnership and its partners. Solar Protect cover pays up to £100,000 of fees with no excess, and partners can be included, subject to the policy limits.

How does an HMRC enquiry into a partnership work?

A partnership files its own return, made by the partner nominated to do so. Under section 12AC of the Taxes Management Act 1970, HMRC can open an enquiry into that return. For a return filed on time, it has 12 months from the date the return was delivered. For a late or amended return, the window runs to the next quarter day after the first anniversary of delivery or amendment.

Section 12AC(6) then deems that notice to include notice of an enquiry into each partner’s own return. HMRC’s guidance says this deemed enquiry is limited to checking items that relate to the partnership. If HMRC wants to look at a partner’s other income, it has to open a separate enquiry within the normal time limits.

Who deals with HMRC?

HMRC’s Enquiry Manual describes the nominated partner as the person who makes and delivers the partnership return, deals with any enquiry into it and keeps the other partners informed. In practice the partnership’s accountant handles the correspondence, but every partner has an interest in the outcome.

Is each partner liable for the others’ tax?

No. HMRC’s Self Assessment Legal Framework manual says “each partner is responsible for paying the tax due on his or her own share” and “There is no joint liability for the tax due on partnership profits.” But an adjustment to the partnership profit flows through to every partner’s share, so one enquiry can change several partners’ tax bills.

What about penalties?

Under Schedule 24 to the Finance Act 2007, the partner who made the partnership return can be liable for a penalty for an inaccuracy in it, and each partner whose own tax is affected can be liable for a partner’s penalty. Careless inaccuracies carry a penalty of up to 30% of the extra tax, reduced for disclosure. See HMRC penalties for tax return errors.

What else might HMRC check in a partnership?

  • how profits and losses were allocated between partners;
  • partners’ drawings, expenses and capital allowances (see allowable business expenses);
  • VAT returns and records;
  • PAYE, if the partnership employs staff;
  • each partner’s payments on account and Self Assessment.

Do LLPs count as partnerships for this?

A limited liability partnership carrying on a business with a view to profit is generally treated like a partnership for Income Tax, so its members file Self Assessment returns and the LLP files a partnership return. The same enquiry rules apply. Check the position with your accountant if your LLP has corporate members.

How far back can HMRC go?

After the enquiry window closes, HMRC can still make a discovery assessment: generally up to 4 years after the end of the tax year, 6 years where the loss was careless and 20 years where it was deliberate.

What does tax investigation insurance pay for?

It pays your accountant’s professional fees for dealing with HMRC, including the partnership return enquiry and the deemed enquiries into the partners’ returns, up to the policy limit. Solar Protect cover also responds to PAYE and National Insurance checks and VAT compliance checks. It does not pay tax, interest or penalties, and it cannot cover a check that began before the policy. Read what tax investigation insurance does not cover and how much an HMRC investigation costs.

How do I get cover for my partnership?

Read about our tax investigation insurance or get a quote for your partnership today. Cover must be in place before HMRC writes.

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 7 October 2026. This guide is general information, not personalised tax advice. Cover is subject to the policy terms, conditions and exclusions.