Practice Note – closure notices

The legislation

TMA 1970, s. 28A(4) (for individuals), s. 28B(5) (for partnerships); and FA 1998, Sch. 18, para. 33(1) (for companies) enable a taxpayer to apply to the tribunal for a direction requiring the officer to issue a closure notice.

Reasonable grounds

Where an application is made, HMRC have to show that they have reasonable grounds for continuing their enquiries. If they cannot satisfy the tribunal in this respect, the tribunal will issue a direction to HMRC that they must issue a closure notice. In Jade Palace Ltd v R & C Commrs (2006) Sp C 540  the Tribunal indicated that those grounds should take account of both proportionality and the burden on the taxpayer.

Period of time for a closure notice

Once the tribunal has concluded that it should make a direction for a closure notice, it has to specify the period in which the notice must be given.  The period should reflect the circumstances and complexity of the case and the length of the enquiry. The longer the period of the enquiry to date, the greater is the burden on HMRC to show reasonable grounds for not issuing a closure notice. In Jade Palace, the Tribunal concluded that four months was adequate. The particular business was not large or complex. It consisted of a single restaurant and takeaway. By the time the closure notice took effect, over two years would have elapsed from the opening of the enquiry.


An application for a closure direction is heard in the same way as an appeal, giving the taxpayer the right to be present and to be heard. Although there is a presumption that an application to the tribunal to issue a closure notice must be granted, unless HMRC show that there are reasonable grounds to refuse it, the tribunal is unlikely to be impressed by an application for a closure notice if the taxpayer has failed to provide HMRC with the information that is reasonably required and caused the very delays that they were complaining about.

There are no limits to the number of applications for a closure direction that can be made in the course of an enquiry.

Opening of enquiries

An application for a closure direction cannot be used to prevent HMRC from opening an enquiry or to avoid the need to provide information required by HMRC. It does, however, give the taxpayer a practical remedy in a number of situations including those where:


A closure notice is an extremely important safeguard for a taxpayer where delay is being caused by HMRC, by failing to identify what is required in order to progress or close the enquiry or by the unreasonable actions of an HMRC officer.  With careful preparation, the Tribunal may usually be persuaded to issue a closure notice within a reasonable period of time, thus saving further administrative and compliance burdens on the hard-pressed taxpayer.


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