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HMRC internal manual

Self Assessment: the legal framework

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HM Revenue & Customs
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Self Assessment for partnerships: partnership Tax Returns

A partnership tax return is required to aid assessment of the individual partners

Section 12AA(1) & (1A)

All partnerships are required to complete and file a partnership tax return to aid the assessment of the members of the partnership, including any corporate members.

The notice to file a tax return requires a return of information reasonably required to establish the amounts in which each partner is chargeable to income tax or corporation tax and the amount of income tax payable. The amount of tax chargeable is a net amount so takes into account any relief or allowance for which a claim is made by the partnership. The amount of income tax payable is also a net figure and takes account of any income tax deducted at source and any tax credits.

Information required in the tax return

Section 12AA(2) & (3)

The tax return is issued to the partnership with a notice requiring the partner identified in that notice to complete the tax return. That partner is responsible for filing the information, accounts, statements and documents that are reasonably required by an officer of the Board for ‘such period as may be specified in the return’. In default HMRC may identify any other partner to complete the tax return.

The period covered by the tax return may vary according to whether the partnership is a partnership of individuals, or whether it includes one or more companies. For example, for individuals the partnership tax return requires a return of information for all accounting periods ending in a particular tax year.

Partnerships may choose to nominate one particular partner to receive and complete the partnership tax returns.

Time limits for filing of the tax return accommodate both individuals and companies

The filing dates for a completed tax return accommodate both individual and corporate partners.

Time limits for individuals

Section 12AA(4) & (4A) to (4E)

Where the completed tax return is required in connection with one or more individuals the filing date for the return is not earlier than the appropriate filing date for those individuals.

So where the notice to file is issued at the normal time the filing date is 31 October following the relevant tax year for a paper partnership tax return and 31 January if the partnership tax return is filed electronically. If the partnership tax return or notice to file is issued after 31 July then the return must be submitted by 3 months after the date of issue or 31 January if later and the return is filed electronically.

Time limits for corporate partners

Section 12AA(5) & (5A) to (5D)

Where the completed tax return is required in connection with one or more companies the filing date for the return is set by reference to the period covered by the return.

So where the notice to file was issued at the normal time the filing date is not earlier than 9 months from the end of the period covered by the tax return for a paper partnership tax return and 12 months if the partnership tax return is filed electronically. Where the notice to file was issued late (that is more than 9 months after the end of the relevant period) the filing date is 3 months after the date of issue of the notice to file.

Time limits for mixed partnerships

The time limits for the filing of the partnership tax return have to be flexible enough to cope with the different types of partnership, and hence combinations of filing dates, that can exist.

  • Where the accounting date of a mixed partnership (one that contains companies and individuals) falls on or between 6 April and 31 January in any tax year the filing date for the partnership tax return is the 31 October following the tax year for a paper return and 31 January for a return filed electronically. For any such case these dates satisfy both Section 12AA(4A) and (4B) for individuals and Section 12AA(5A) and (5B) for corporate partners.
  • Where the accounting date of a mixed partnership falls on or between 1 February and 5 April in any tax year the filing date for the partnership tax return is 9 months after that accounting date for a paper return and 12 months for a return filed electronically. Again this rule ensures that both Section 12AA(4A) and (4B) for individuals and Section 12AA(5A) and (5B) for corporate partners are satisfied.
  • Where the accounting date of a mixed partnership falls on or between 1 February and 5 April in any tax year any members of the partnership who are individuals are required to file their own personal tax returns before the partnership return is required.

In such cases it may be that the partnership tax return can be completed and submitted before the formal filing date, but where this is not possible, the partner will have to include an estimate of his or her share of partnership profits in the tax return, and then correct it when the final figure becomes available.

Details of partners must be included in the tax return

Section 12AA(6) & (10)

The tax return must include the names, addresses (or registered office) and tax references of each of the partners in the partnership. It must also include a declaration by the person making the tax return that to the best of that person’s knowledge and belief the return is correct and complete.

The identification of individual partners allows the partnership tax return to be cross-checked against individual returns.

Details relating to the disposal of partnership property must be included in the tax return

Section 12AA(7)

The tax return should include any details required to calculate chargeable gains arising on partnership assets, for example the disposal proceeds, and, if required, the tax return should include details of any assets acquired by the partnership.

However, the partnership is not required to provide capital gains tax computations. This is because there has to be a separate calculation for each partner to take into account different periods of ownership and different acquisition values.

More than one tax computation may be required

Section 12AA(9)

The notice to file may require different information, accounts and statements for different types of partnership.

For example, where a partnership includes both individuals and companies at least 2 free standing profit calculations are required with the tax return. One calculation uses income tax rules, as if the partnership profits arose solely to individuals, and appropriate profit shares will be allocated to all those members liable to income tax. The second uses corporation tax rules, as if the partnership profits arose to a company, and appropriate profit shares will be allocated to all those members liable to corporation tax.

Claims and elections

Section 42(6) & (7)

Certain specified claims and elections must be made in the partnership tax return. These are those claims and elections that have a bearing on the computation of partnership profit, for example claims to capital allowances and to relief for pre-trading expenditure.