Partnership returns – paper and penalties. By Rebecca Benneyworth

Hopefully in a case like that you have a Large Business Unit contact who should accept a reasonable get around.

From conversations I have had the suggestion in the Specials & Exclusions list was badly worded by HMRC and in fact refers to the wrong boxes. If the software developer followed it to the letter you get an odd result.

Further after discussing this in one instance HMRC seemed happy that so long as the true figures were shown in the attachments what the return showed was neither here nor there - I paraphrase.

The main thing is speak to HMRC contact - forcing it up if you do not have a dedicated LBU contact - and agree a way forward agreeable to both, say enter turnover <£15M and a single "Other Expense" adjustment to get to the true tax profit. That should let you allocate it to partners in your software, and with the other attachments sent electronically with the return should satisfy everyone.

I am not so sure that HMRC does actually connect the share according to the partnership return with the personal return just yet, but I could be wrong!

There is a further problem for partnerships with turnover greater than £15 million. The specials and exclusions for SA800 returns indicates that where a partnership return shows turnover of more than £15 million boxes 3.2 to 3.13 should be completed but boxes 3.14 to 3.115 should be left blank. It also instructs that boxes 11, 11A and 12 should be omitted if partner statements are completed. The list does not however give any guidance on where and how you are expected to notify details of the profit and UITF40 adjustment. Some of the commercial software, in line with this HMRC guidance, does not enable the profit figure or WIP adjustment to be entered and thus these figures cannot be allocated among partners and linked to their individual SA100 returns. Neither the software company or HMRC have given an explanation of what should be done.

Thanks Rebecca. HMRC 's recent update on online filing and the guidance connected with the reasonable excuse form is available at http://www.hmrc.gov.uk/carter/sa-agentupdate1.htm

HMRC have indicated that this guidance will be updated periodically with help from the Working Together E-Group - so tax advisers who file online may wish to keep an eye on this in the run up to 31 January.

Tina Riches
Technical Director (Cross-Cutting)
The Chartered Institute of Taxation

I have been contacted via the editor by CIOT who have advised me of a change of process agreed with HMRC via the Working Together initiative. Many thanks to them for pointing this out.

HMRC updated guidance on offering reasonable excuse when the return is filed. There is a risk that the comments on the return will not stand out sufficiently, so a special form has been jointly devised to highlight the claim to reasonable excuse. It is also acceptable to use a letter to highlight the claim but for reasons outlined it is inadvisable to include the claim on the return.

The form is available at www.hmrc.gov.uk/carter/sa-reasonableexcuse.pdf and this provides an easy way of ensuring that all of the information needed is provided at the outset, and that the claim is identified and actioned promptly.

Surely it would be worth HMRC's while to provide an online solution for Nil returns - any penalty would be refundable in any case and it would get them out of the way in an automated manner.

Or would any attempt be subject to too many 'special cases' to be worthwhile, and so would "feature-creep" towards a full online return ?

I wonder whether the getaround at point 25 on page 7 of the Personal Special cases - http://www.hmrc.gov.uk/ebu/se-indi.pdf - might work, ie using a dummy UTR of 99999 99999

Perhaps HMRC should be pushed by CIOT / Tax Faculty sooner rather than later to confirm such a getaround for the circumstance of a new partner for whom a UTR has not been issued.

That's a very useful confirmation of what I hoped (but like you was not 100% certain) would be the case.

It should be noted that HMRC may refuse to issue UTRs to some partners - particularly of investment partnerships - such as charities and pension schemes.

V.

There are some (not many) partnership Specials and Exclusions which can be found here http://www.hmrc.gov.uk/ebu/se-partner.pdf