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HMRC internal manual

Self Assessment: the legal framework

Self Assessment for partnerships: introduction

There are no partnership assessments under self assessment

Each partner is assessed on his or her share of the partnership profits and each partner is solely responsible for the tax due on that share. So individual partners are required to include his or her share of any partnership profits in their own tax return of total income and in their own self assessment.

A partnership tax return is required to allow partnership matters to be dealt with centrally

The rules for calculating taxable profits operate by reference to sources of income. Where, for example, a partnership carries on a trade, that trade is a single source of trading income regardless of the number of partners entitled to share the profits from that trade.

So although the rules for the assessment and collection of tax operate on the partners as if the partnership did not exist, it makes practical sense for both taxpayers and HMRC if all matters relating to the calculation of partnership profits, income or gains are dealt with centrally in a partnership tax return made by the partnership on behalf of all the partners.

The partnership tax return includes all information required to calculate the profits arising from any partnership business in the accounting periods covered by the return, including any claims (such as capital allowances) that must be taken into account when calculating the profits of that trade. In addition it includes details of any partnership investment income.

The partnership tax return also needs to include details of the profit allocation in force for the accounting periods covered by the return.

The partnership tax return is subject to the same self assessment enquiry procedures that apply to individual returns.

Individual partners are not entitled to make any adjustments to the amount of partnership profit allocated to them in the partnership tax return. They are required to include exactly the same figure of their share of the partnership profit in their personal tax return of total income.