Two clients started a partnership from 1/4/11 and have been sent late filing penalties for themselves and the partnership for 10/11. Is this right, as a 31st March year end was always allowed to be treated as a 5th April year end for tax return purposes? Would an appeal on this basis be successful? They were intending to use 31st March as their first accounting date.
If not, is it possible to go back and amend one's starting date by five days?!
Thank you.
Replies (5)
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Was a notice to file issued?
Hello there
If a notice to file was issued, and a tax return was not filed, then my view is that the penalties should stand. The partnership existed in the tax year, albeit the profit for that year would be £nil. Therefore, the returns should have been submitted showing a pofit of £nil.
Unfortunately, I think an appeal would be unsuccessful - but always worth a punt!
1st April 2011 was a Friday
I agree that if a (notice to file a) partnership tax return was issued and one was not submitted, the penalties are chargeable, but you lose nothing by trying an appeal.
I am puzzled as to why anyone would have said that they started a partnership on a Friday. Admittedly, the same penalties would apply if the partnership was notified as starting on the following Monday, 4th, or Tuesday, 5th April, but Wednesday, 6th, or Monday, 11th April would have avoided the problem. Whoever specified 1st April as the start date has cost the partners the £200 penalty.
when did trading start?
The mere existence of a partnership (or Ltd Co or LLP) does not bring it within the tax net - it has to do something taxable and if no trading (or similar) took place before 6 April you could try and argue that the notice was not valid because nothing had happend.
We had a similar situation - a dormant LLP with a notice to file issued but we were within time so we filed an SA800 with no numbers in it at all because that was less hassle than arguing that no trade had started.
A great example of why an accountant should be engaged at the beginning. Ties in with Q&A about the demise of the small practice accountant.