UK tax: Partnership Tax Return Guide

This is a guide for those who run a partnership PLC business. Please not the rules will vary for LLC’s and other business structures.

Tax Deadlines for UK Partnerships

Paper tax returns are due in on the 31st October. While those who file online must do so by the 31st January.

If the HMRC gave you notice to make a Partnership Tax Return after the 31st July of the previous year, you may have longer to file your return.

What does a Partnership Tax return include?

A Partnership Tax Return will ask for the details of your partnership’s income and related information.

The first 8 pages of a Partnership Tax Return covers the income from trades and professions, and interest or alternative finance receipts from banks, building societies or deposit takers. There are also ‘supplementary’ pages covering the less common types of income and disposals of chargeable assets.

As the partner completing the Partnership Tax Return it is your responsibility to make sure that you fill in the correct supplementary pages.

Penalties for failing to file by the deadline

If you fail to file your Partnership Tax Return by the appropriate deadline, the HMRC will charge each partner who was a member of the partnership during the return period a £100 penalty.

As the delay continue, the penalty will increase for each member:

·      Over 3 months late- a penalty for each additional day of the Partnership Tax Return is late for a maximum of 90 days (£900)

·      Over 6 month late- a fixed £300 penalty

·      Over 12 months late- a further fixed £300 penalty

 

Changes in the membership of a partnership

For tax purposes, business carried on in a partnership is regarded as continuous, despite any changes to the members of the partnership, provided there is at least 1 partner who is a member of both sides of the change. It is important to confirm that, where a partner has only been a member of the partnership for a part of the period covered by the Partnership Tax Return this fact is correctly reflected in the partner details section and profit share information provided in the Partnership Statement.

Tax due on shares of partnership income

The information provided to the HMRC in your Partnership Tax Return will be used to check that the partners are paying the correct tax and Class 4 National Insurance Contributions (NICs) due on their share of the partnership profits. Each partner is liable only up to the tax due on his or her share of the partnership profit.

Types of partnerships

A partnership for the purposes of the Partnership Tax Return includes:

·      A partnership governed by the Partnership Act 1890

·      A limited partnership registered under the Limited Partnership Act 1907

·      A limited Partnership under the Limited Partnership Act 1907

·      A limited liability partnership (LLP) registered under the LLP Act 2000 unless the LLP

o   Does not carry on a business with a view to profit

o   Is being formally wounded up

In which instance the LLP may need to file a Corporation Tax Return.

Contact us for expert tax advice for partnerships