Referring an enquiry question to the tax tribunal

While an enquiry into a return is open, the taxpayer and HMRC can jointly refer any question arising from the subject of the enquiry to the tax tribunal under section 28ZA of the Taxes Management Act 1970 (TMA 1970), or paragraph 31A of Schedule 18 to the Finance Act 1998 for companies. The tribunal’s answer binds both sides like a ruling on a preliminary issue in an appeal. It is rarely used, and works best for a single important question that is holding up an otherwise agreed enquiry.

What does section 28ZA allow?

Section 28ZA(1) says that at any time when an enquiry under section 9A(1) or 12AC(1) TMA 1970 is in progress, any question arising in connection with the subject matter of the enquiry may be referred to the tribunal for determination. Section 9A covers personal and trustee returns and section 12AC covers partnership returns. Paragraph 31A of Schedule 18 gives the same power for company tax returns.

Key features of the statutory scheme:

• Joint notice. Section 28ZA(2) requires the notice of referral to be given jointly by the taxpayer and an HMRC officer, to the tribunal.
• More than one referral. Section 28ZA(4) allows several referrals in the same enquiry.
• Timing. Under section 28ZA(5) the enquiry is in progress from the notice of enquiry until the partial closure notice on the relevant issue or, if none, the final closure notice.
• Who the taxpayer is. For a partnership enquiry, section 28ZA(6) means the person given notice of enquiry or their successor.

The power does not extend to an enquiry into a claim made outside a return under Schedule 1A; see HMRC enquiries into claims made outside a return.

Does HMRC have to agree?

Yes. Because the referral must be joint, either side can refuse. HMRC’s Enquiry Manual at EM1910 and its appeals guidance at ARTG7555 both say there is no right of appeal against a refusal by either party. If HMRC declines a request from you, EM1910 tells the officer to write explaining why and to remind you of your right to appeal any amendment at the end of the enquiry.

A refusal is not the end of the road. EM1910 recognises that a refusal may lead the taxpayer to apply to the tribunal for a direction requiring HMRC to issue a partial or final closure notice; see asking the tribunal to make HMRC close an enquiry. ARTG7555 notes that either party may instead progress the issue through a partial closure notice.

How is a referral made?

ARTG7555 sets out what the referral must contain. It must:

1. concern a question relevant to the subject of the enquiry;
2. be made at any time between the date HMRC gave notice of enquiry and the date the enquiry is completed;
3. be made jointly by HMRC and the taxpayer, in writing;
4. state the question or questions being referred.

Drafting the question is the most important step. It should be narrow enough for the tribunal to answer cleanly and agreed in wording by both sides. A vague question invites argument later about what was actually decided.

What happens to the enquiry while the referral is live?

Section 28ZD(1) freezes the parts of the enquiry the referral touches. While proceedings on the referral are in progress:

• HMRC cannot give a partial closure notice on the question referred;
• HMRC cannot give a final closure notice for the enquiry;
• neither can the taxpayer apply for a direction to issue either notice.

Under section 28ZD(2) and (3), proceedings are in progress from the notice of referral until it is withdrawn or the question is finally determined, meaning there is no further possibility of the decision being varied or set aside. HMRC can still work on other issues and close them by partial closure notice where they are separate from the question referred. Paragraph 31C of Schedule 18 has the same effect for companies.

Section 28ZB(1) lets either party withdraw the referral. ARTG7555 says withdrawal must be in writing to the other party and the tribunal, before the hearing.

How binding is the tribunal’s answer?

Section 28ZE(1) says the determination binds the parties in the same way, and to the same extent, as a decision on a preliminary issue in an appeal. Under section 28ZE(2) the officer must take it into account in reaching conclusions and formulating any amendments in the closure notice. Section 28ZE(3) then stops either side using a later appeal against the closure notice to reopen the question, except to the extent a preliminary issue decision could be reopened. ARTG7555 adds that either party may appeal the tribunal’s decision on a point of law; see Upper Tribunal tax appeals.

When is a referral worthwhile?

HMRC’s guidance is cautious. EM1910 says most cases are not suitable, and that questions referred will usually be complex and important and handled by specialist offices or policy teams. ARTG7555 says joint applications are rare and partial closure notices are more likely to be used. Before agreeing, EM1910 tells officers to consider:

• whether the enquiry could simply be closed now, or should stay open;
• whether a partial closure notice would be more appropriate;
• the delay in bringing any extra tax into charge;
• other questions that should go in the same referral;
• whether the question is important or complex enough to need the tribunal.

EM3831A gives one situation where HMRC itself should consider a referral: avoidance cases where several pieces of legislation might apply and it is unclear which conclusion is correct.

From the taxpayer’s side, a referral tends to make sense where the facts and figures are largely agreed and one question of law or interpretation decides the outcome, where that question also affects later years, or where getting a binding answer early avoids a long enquiry. It is less useful where facts are still disputed, where the question can be separated cleanly and closed by a partial closure notice, or where alternative dispute resolution could settle it without a hearing. EM1910 itself points to ADR as an option where a referral is not appropriate.

A worked example

Illustration only. HMRC is enquiring into a partnership return. Both sides agree every figure except one: whether a £60,000 payment to end a supply contract is a revenue expense or a capital payment. The answer also affects two later years. The partnership and HMRC agree the question in writing and send a joint notice of referral to the tribunal. While it is pending, HMRC cannot issue a final closure notice. The tribunal decides the payment is revenue. Neither side appeals, so the officer issues a closure notice reflecting that answer, and neither party can reopen the point in an appeal against the closure notice.

What mistakes should you avoid?

• Referring a question of fact that is still moving. The tribunal answers the question as framed; if the facts change, the answer may not help.
• Loose wording. Agree the precise question before signing the joint notice.
• Forgetting the freeze. A live referral blocks a final closure notice and closure applications on the question referred.
• Assuming you can relitigate. Section 28ZE(3) limits reopening the answer in a later appeal.
• Using it for a Schedule 1A claim enquiry. The section 28ZA power applies only to return enquiries.

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Related Accountapedia entries

• Asking the tribunal to make HMRC close an enquiry
• Costs in tax tribunal appeals
• HMRC Statutory Review and the Tax Tribunal
• HMRC Enquiry Glossary
• Who can represent you at the tax tribunal

Sources

• legislation.gov.uk: Act 1970 c. 9, section 28ZA
• legislation.gov.uk: Act 1998 c. 36, schedule 18
• GOV.UK: Manual page EM1910
• GOV.UK: Manual page ARTG7555
• legislation.gov.uk: Act 1970 c. 9, section 28ZB
• legislation.gov.uk: Act 1970 c. 9, section 28ZD
• legislation.gov.uk: Act 1970 c. 9, section 28ZE
• GOV.UK: Em3831a

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 24 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.