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HMRC internal manual

Partnership Manual

Settling partnership enquiries

An amendment to the partnership statement usually means that all the partners’ returns also need to be amended to reflect the change. A partnership which is not a legal person is not able to enter into a contract settlement. Of course, a contract settlement can be made with each partner in respect of additional liability arising on their share of the income, computed in accordance with the tax regime that applies, i.e. income tax or corporation tax.

A partnership which is a separate legal person (for example, a Scottish partnership or LLP) is able to enter into a contract settlement.

In large partnership cases, to ease the administrative burden to HMRC and the customer, it may be possible to agree a contract settlement with the nominated partner which encompasses the liabilities of all the partners. Caseworkers should be confident that the terms of the contract will be adhered to in good faith before agreeing to this. For example, it may be appropriate in a case involving a CCM (Customer Compliance Manager) business that has a history of good cooperation with HMRC. HMRC would also expect the customer to have made payment on account to cover the additional tax, interest and penalties chargeable on all partners prior to entering into a contract in order to demonstrate the customer’s willingness to comply.