§ Mrs. GillanTo ask the Chancellor of the Exchequer what guidelines are issued by the Inland Revenue regarding the tax treatment of married couples where a business partnership exists between husband and wife; if, in these circumstances, an investigation into the tax affairs of either husband or wife automatically triggers an investigation into the financial circumstances of the spouse; and if he will make a statement. [135158]
§ Dawn Primarolo[holding answer 6 November 2000]: The tax treatment of a business partnership between husband and wife is the same as the tax treatment of any other business partnership.
The Inland Revenue may open an inquiry into the partnership return and any or all of the partners' personal returns. The official guidance is that before they issue a notice of an inquiry into the partnership return, staff should review the returns of all relevant partners. Where staff decide that they need to check whether the partnership return is fundamentally incorrect, they will normally need to inquire into all of the individual partners' returns as well. This is to ensure that all risks of error or evasion in the partnership are looked at properly.
Where a partner's personal return is selected for inquiry on its merits, without an inquiry into the partnership return, then an inquiry into the spouse's return is not triggered automatically.