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HMRC internal manual

Compliance Handbook

Penalties for failure to file on time: types of penalties for failure to file on time: penalties involving partnerships: overview

If the outstanding return relates to a partnership, the way in which the penalty is calculated and assessed depends on the tax to which the return relates.

Partnership returns for income tax (IT) and capital gains tax (CGT)

For IT and CGT a partnership is not a person in its own right and therefore it does not have a liability to tax. The liability to tax arises on the individual partners based on their share of the partnership profits shown on the partnership return.

When there is a failure to file a partnership return, each relevant partner is liable to the penalties that would have been charged on the partnership. We will charge the relevant partners the initial fixed penalty and the daily penalties.

Because a partnership return does not have a tax liability we cannot charge a tax-geared penalty for a failure to file a partnership return. Instead, each relevant partner will be liable to the minimum penalty of £300 for the 6 month further penalty and 12 month further penalty.

Any late filing penalties that have been charged will be cancelled where we agree to withdraw the notice to file a self assessment tax return, see CH61700.

Partnership returns for CIS, Bank Payroll Tax, Registered Pension Scheme (RPS) and Machine Games Duty (MGD)

For the purpose of most taxes, duties or levies, including CIS, BPT, RPS and employer liabilities, a partnership is treated as a person in its own right.

The 6 month and 12 month further tax-geared penalties for

are based on the liability that has, or would have been, shown in the return.

We issue the penalty assessment to the partnership.