Late Tax Returns

Late Tax Returns

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I have just picked up a new client (partnership) who have not informed HMRC of trading back in 2004/2005. Therefore I have to prepare tax returns for 04/05 - 07/08.

The partnership made small losses each year and no tax will be due. Neither partner has submitted a tax return as they only have employment income.

How should I go about submitting returns, notifying HMRC etc,,.

Also I assume there will be no penalties as losses and no tax is payable. Is this correct?

Accountant

Replies (4)

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By User deleted
03rd Sep 2008 17:20

Of course you might be correct but

it would be helpful if you could point me in the direction of the legislation that states that a £100 penalty is incurred when HMRC have not issued a return as is clearly the case here.

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By User deleted
03rd Sep 2008 07:21

I agree with the first poster
The partnership will have a penalty for each year for failing to submit a partnership tax return, as will each of the partners. This is not reduced if not tax is due and would initially be £100 for each partner. This penalty rises to £200 if the return is submitted more than 6 months late, So as a minimum for 04/05, 05/06 and 06/07 you are looking at 3 years x 2 penalties of £200 each.

The partners penalties for late personal tax returns can't exceed the tax due, so should be zero.

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By User deleted
02nd Sep 2008 23:25

Not sure where that answer came from.
You have a Failure to Notify position for the indivdual partners, as none of the let outs apply to income from self-employment/partherships.

As no tax due then no penalties.

You will also have a failure to notify commencement of Class II NIC liability.

No late filing as that only applies after return has been issued by HMRC.

Partnerships have no obligation to notify liability.

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By Richardrussell
02nd Sep 2008 13:35

For an individual
the late filing penalty is limited to the lower of tax due and £100.

However, as a partnership cannot pay tax itself, the penalty stands at £100 - PER PARTNER.

So if there were 2 partners, I think the penalties would be something like:

04-05 - due 31.1.06 - 2 partners x 2 late fees (Jan & Jul) x £100 = £400

Same for 05/06 and 06/07 (which was due 31.1.08, so penalty for not filing at end of January or end of July).

So BEST CASE SCENARIO is £1,200 penalties. Assuming there are only 2 partners.

If you have not notified HMRC, your best bet may be to consider whether this is a genuine partnership.

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