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HMRC internal manual

Self Assessment Manual

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HM Revenue & Customs
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Records: set up taxpayer record: set up partnership record

The Central Agent Authorisation Team (CAAT) in NICO is responsible for setting up partnership records from form SA400.

Why a partnership record is necessary

The individual partners in a partnership are required to make a return of their share of partnership profits, and to pay any liability arising from those profits.

The partnership is required to make a return of partnership profits, showing the allocation between the individual partners. A partnership computer record is necessary, to control issue and receipt of the return.

Before setting up a new partnership record you must establish if the partnership is already set up on SA.

Types of partnership

There are three partnership types

  • Ordinary Partnership (OP)
  • Limited Partnership (LP) - Notified by form LP5
  • Limited Liability Partnership (LLP) - Notified by form LLP2

If you do not have confirmation of the type of partnership when setting up the record set the partnership type to Ordinary partnership. The partnership type can be changed when confirmation is received by using function AMEND TAXPAYER SIGNALS.

Multiple trade sources

A single partnership, created under a single partnership agreement, may carry on more than one trade. However, separate partnerships may have been formed to carry on each trade. In this event, strictly a partnership return is required from each partnership.

In practice you will not be aware of the situation unless the partnership or agent specifically advises you.

Where there are two or more trades carried on by a partnership, or partnerships with the same partners, you normally require only one SA record. One partnership return is issued. When completing the return, the partnership should complete one trade page for each trade source.

Failure to file the return by the filing date will attract a penalty in the normal way.

Partnership multiple trades will be relatively uncommon.

Linking the partners’ and partnership records

A link is made between the partner and the partnership records at the time a partner source is entered on the individual or company taxpayer’s record. The operator will need to know the partnership Unique Taxpayer Reference (UTR), and the date the partner commenced in partnership.

Initial information and considerations

Before setting up the SA record for a new partnership, you have to obtain the information that is required for the SA computer record. A completed form SA400 (see SAM100135 and SAM100136) and, if appropriate, form 64-8 will provide that information.

A Limited Liability Partnership (LLP) will be set up in SA with a partnership record unless

  • The LLP is not carrying on a commercial business, for example clubs and societies

Or

  • The LLP is in liquidation. Note: An ITSA return will be required for the period up to the date of liquidation, a Company tax return will be required for the post liquidation period

It is therefore important that you notify the CT section in any of the above circumstances, so that a CT file and COTAX record can be set up.

For further information, see the COTAX Manual at business area ‘Case Records’, section ‘Setting up Case Records’, subject ‘Limited Liability Partnerships (Info)’.

Limited Liability Partnerships have to register with Companies House. To do this they have to complete a form LLP2 (which they can obtain from Companies House) when setting up a new business or converting an existing business to a Limited Liability Partnership.

Centre for Research & Intelligence (CRI) have electronic access to the LLP2’s, and will issue these to the area office dealing with the address of the Registered Office. On receipt the area office will use the tracing facility to establish the business address, and will send the form to the office responsible for the business address where the SA record should be set up in the normal way.

Note: Where form LLP2 indicates that an existing ‘Ordinary partnership’ has converted to a Limited Liability Partnership, the partnership type on the existing SA record should be amended using function AMEND TAXPAYER SIGNALS.

The Company Registration Number for Limited Liability Partnerships will be shown on the LLP2.

LBOs will continue to deal with their own cases.

Where you receive details of a new partnership, or assist a partner to complete a form SA400 for the partnership, and the business address falls outside your geographical area of responsibility, you should send the details to the appropriate office with responsibility for processing work.

Where, after 5 April 1996, the partnership commences trading within the construction industry, referencing for National Insurance Contributions Office purposes is controlled from the establishment file ‘Construction Industry Cases’.

Where, exceptionally, a partnership is a partner in another partnership, see the subject ‘Partnership As Partner’ (SAM100140).

You should then decide, using the Action Guide, what computer functions to use to set up the partnership record.

When you set up the record, the system will allocate a UTR.

A trading source for a trade, business, profession or vocation has to be set up as a source on the SA record for compliance purposes.

Partnership return

Unless, exceptionally, the partnership return is issued to a named partner, the members of a partnership are required under S12AA(2) TMA 1970 to nominate one of their number to complete and file the partnership return including the partnership statement. This partner is referred to as the nominated partner, see subject ‘Maintain Taxpayer Record: Nominated Partner’ (SAM101290). The term representative partner may also be used to describe the nominated partner.

Where an existing partnership converts to a Limited Liability Partnership only one return is required for the whole year.

If either of the following apply

  • All of the partners in the partnership are companies

Or

  • One or more, but not all, of the partners are companies, and the partnership accounting date falls in the period 1 February to 5 April inclusive

You should also

* Use function AMEND TAXPAYER SIGNALS to set the Manual Return signal on the partnership record

And  


* Note on the partnership permanent notes pad that the Manual Return signal has been set because of a non-standard filing date

Advice on non-standard filing dates is available in section ‘Returns Issue’ (SAM120000 onwards).