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HMRC internal manual

Enquiry Manual

HM Revenue & Customs
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Partnerships: Deceased Partners: Pre-SA Years

An assessment in the name of the partnership can be made, and the whole of the tax and NIC recovered, within normal time limits where a partner has died, even where the death has resulted in the cessation of the partnership (North v Dr W K Spencer’s Exors and Dr C H Spencer, 36TC668).

The question of the time limit for an assessment on a partnership where one of the partners has died was considered in Harrison v Willis Bros, 43TC61. Broadly, the effect of this decision on assessments in partnership cases is as follows.

  • Assessments may be made within the time limits, provided that at least one of the members of the partnership is alive at the time when the assessment is made and other conditions are met.
  • If no member of the partnership is still alive when the assessment is made, the time limits in TMA70/S40 (1) or TMA70/S40 (2) apply, and the assessment should be made within three years of the end of the year of assessment in which the last surviving partner died.
  • Assessments are only effective for purposes of collection against those who were partners in the year of assessment and who survive at the time when the assessment is made or, if none survive, against the executors of the last surviving partner in a case where the assessment is made within the time limits prescribed by TMA70/S40 (1) or TMA70/S40 (2).

In Scotland, the law on partnerships is unaffected by the decision in Harrison v Willis Bros. as Section 4 of the Partnership Act 1890, expressly preserves the rule of the law of Scotland that a firm is a legal personality distinct from the persons who control it. Every partner is liable jointly and severally for all the debts of the firm incurred while he is a partner, and the estate of a deceased partner is also liable (Section 9 of the Partnership Act 1890). The assessments on partnerships will continue to be made in the firm’s name and the tax will be the joint and several liability of the partners. Although, legally, a partnership comes to an end on the death of one of the partners, the partnership continues to exist for the purpose of receiving or paying debts.