Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Self Assessment Manual

From
HM Revenue & Customs
Updated
, see all updates

Records: maintain taxpayer record: maintain partnership record

A partnership record will have been set up on the SA system by use of function SET UP PARTNERSHIP. Subsequently function SET UP PARTNER will have been used to link the partners with the partnership.

Where there are trading profits including profit from a profession or vocation, they have to be set up as a source on the SA record for compliance purposes. The SA partnership record can hold only one live trade source.

The remainder of this subject is presented as follows

Types of partnership

There are three types of partnership

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

Unless confirmation of the type of partnership was held when the record was set up, the type of partnership will be shown as ‘Ordinary partnership’. When confirmation of the type of partnership is received, use function AMEND TAXPAYER SIGNALS to amend the signal to the correct type.

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.

File the LLP2s away after you have set the partnership type and entered the Company Registration Number.

Multiple 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, a partnership return is required from each partnership. A separate partnership record is therefore required.

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.

You can amend any of the details set up on the SA record in respect of a partnership.

Late filing penalties

Where a partnership return is not filed by the filing date, each partner will be charged a penalty. The process is automatic. More detail is available in business area ‘Interest/Penalties/Surcharge’, section ‘Penalties’ (SAM61000).

Exceptionally, a partner may be linked to the partnership record after the fixed penalty has been imposed on each partner, for a year in which that partner was a member of the partnership.

In this event, you must apply the penalty clerically. This will need to be done by creating a miscellaneous penalty charge using function CREATE SUNDRY CHARGE on the partners record. For further information, see subject ‘Manually raising a penalty’ Action Guide at SAM61281.

Any appeal against the penalty is dealt with from the partnership record. Further advice is available in section ‘Appeals’.

Company as partner

The presence of a company as a partner may affect the filing date of the partnership return. In such cases, the partnership return must be issued manually and show the non-standard filing date.

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

* 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’, in business area ‘Returns’.

Limited Liability Partnership

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 Partnership’.

Further information

You will find further information on maintaining the partnership record in the following subjects within this section

If you want to know which function(s) to use to maintain different aspects of a partnership’s SA record

  • Select ‘Index of Functions’ on the left of the screen