Help Please - tax return form partnership that is now an LLP

Help Please - tax return form partnership that...

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Hi everyone

A partnership I complete tax returns for became an LLP on 1 August 2010.  When registering the new LLP, HMRC advised that the UTR number for the partnership should remain the same.

I am about to start work on the 2011 Pship tax return forms but I am getting in a bit of a muddle.

I have two sets of accounts......one for the old partnership, drawn up to 31 July 2010 (usual year end 31 May), and a set for the LLP drawn up for the period 1 August 2010 to 31 May 2011.

I'm happy that the partnership accounts to 31 July should be disclosed on the 2011 Pship TR.  However, what happens with the LLP accounts?  Is it classed as a new business and the opening year rules applied?  Or, do these accounts not need to be disclosed until 2012?

The UTR being the same may cause a problem if I need to disclose both sets of accounts because the LLP and the Pship have been set up under two separate references in the software I am using.

Can anybody help?

Regards

Jade

Replies (7)

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By adrianstone
12th Oct 2011 11:40

The conversion makes no difference from a tax perspective, the "first year" of the LLP will be taxed in 2011/12 on an ordinary basis.

This assumes nothing clever has been done in terms of old partners retiring and becoming shareholders in corporate members of the new LLP. Ordinarily (if the partners remain the same), the basis of taxation will remain the same and there will be no overlap relief claim etc

Thanks (1)
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By ACDWebb
12th Oct 2011 11:43

Check

HMRC Tax Bulletin 50

"Cessation

Where a LLP succeeds to a business previously carried on by an old partnership this will not of itself involve the cessation of the old partnership’s trade or profession.

Tax returns

Where an old partnership incorporates as a LLP during an accounting period then if the partners so wish a single partnership return need only be made for the one tax year. They may do this even if the partnership changes its accounting date. Single PAYE returns may also be made for the tax year in which an old partnership incorporates as a LLP."

So on the face of it you might return 31/5/10 for 2010/11 and amalgamate pe 31/7/10 and pe 31/5/11 for 2011/12

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By chillertwist
12th Oct 2011 12:43

 

 

Thanks you both for your help.  This is now making much more sense!

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By chillertwist
12th Oct 2011 14:45

 

 

 

I've hit another snag.  

A new partner was introduced on 1 August 2010, and the opening year rules will need to apply.

How will this affect the partnership return? 

 

 

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By Marion Hayes
12th Oct 2011 20:32

Opening rules only apply to new partner

The 31/5/10 accounts did not include the new partner so he is not mentioned on the 2010/11 partnership return.

The 31/5/11 accounts and 2011/12 return will include the introduction of the new partner. 

An estimate of his opening year appears on his personal return to 5/4/11. Then, when 2011/12 return is prepared for the partnership and a 12 month profit share is available, he will operate opening rules on that one profit share, amend the 2010/11 to actual and put ye 31/5/11 and associated overlap calculation on his 2011/12 return.

pm me if you need a worked example

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By Marion Hayes
12th Oct 2011 23:05

@ACDWebb

I see what you mean on the statement and, thinking about the entries needed, it is possible a new partner could be entitled to investment income on the first return even though not entitled to profits. I assume that net taxed income is still entered on a fiscal year basis as opposed to an accounts year.

Thanks for the correction

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Replying to Rachael_Power:
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By ACDWebb
13th Oct 2011 07:42

@Marion

Marion Hayes wrote:

I see what you mean on the statement and, thinking about the entries needed, it is possible a new partner could be entitled to investment income on the first return even though not entitled to profits. I assume that net taxed income is still entered on a fiscal year basis as opposed to an accounts year.

Thanks for the correction

True

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