Partnership split up

Partnership split up

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'A' and 'B' operated a trade in partnership, with 'A' being the nominated partner
The partnership dissolved (acrimoniously)
'A' continues the business as sole trader
Notice is served requiring the delivery of a partnership tax return for the tax year in which dissolution takes place.
'A' fails to co-operate with 'B' by providing financial information to assist the latter in completing a personal tax return, and furthermore is late filing the partnership tax return causing penalties to be levied on each of 'A' and 'B' under schedule 55 FA 2009.

It seems to me that 'B' may have a civil action against 'A' for his share of the penalties, but HMRC will apply primarily to 'B' for the penalties levied on 'B'. Moreover collection of anything from 'A' by 'B' may be uncertain, even with a legal right. Accordingly we are concerned where possible to mitigate the penalties chargeable in the first place.

My questions therefore are:
1) Would these circumstances comprise "reasonable grounds" in support of an appeal lodged by 'B'?
2) Is there a procedure whereby 'B' can by dealing direct with HMRC prevent the issue of further penalties on him, assuming continued delays by 'A'?

Clearly, 'B' has additional problems in entering an appropriate profit share in the personal tax return, but these issues are well rehearsed and addressed in EM7025. It is the penalty aspect that immediately concerns me.

Any help appreciated.

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By johngroganjga
23rd Jan 2014 20:58

In my opinion a reasonable grounds appeal is well worth a try.

Surely efforts should be concentrated on getting the partnership return submitted without further delay, rather than working on ways to mitigate B's exposure to the further penalties that will be charged if it is not.

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