Basis Periods & LLPs

Are LLPs affected by the change of basis periods?

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Hi

I can't seem to find confirmation as to whether LLPs are affected by the change in basis period rules (I am aware it is the individual partners that are most affected, but just considering whether we need to do a long accounting period for our client to 5 April?).   HMRCs guidance refers to unincorporated businesses, which LLPs are (i assume) not, however when doing a google search, LLPs seem to be included on some accountants webpages (as well as the Law Society) - and there's even an example on one website using an LLP.

In our case the main partner is a Ltd Co, who has the same year end, so ideally no change would be preferable!

Would just like a clarification, as i'm of the opinion that LLPs are not included, as there is no mention in the draft legislation.

Thanks!

Jonathan.

 

Replies (12)

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By thevaliant
19th Apr 2024 11:00

I have one LLP client.

I don't do tax.

Our tax manager has approached me and told me that I WILL get her a set of the accounts to 31st March (even though their year end is April) and that's the end of that.

I've changed their year end to March, moved their VAT quarter to align and changed their system to match.

I wasn't given a choice (well, I was, but it wasn't worth doing two sets of accounts).

So I think the answer is, if you're an LLP, you move the year end to March unless all your partners are companies (which I think isn't allowed anyway?).

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By Tax Dragon
19th Apr 2024 11:22

I don't see much point changing April year end to March. Feb to March yes.

I don't think LLPs would need a specific mention in the new law, would they (btw it is law, not draft)? They're taxed as partnerships (s863).

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Replying to Tax Dragon:
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By More unearned luck
19th Apr 2024 12:57

"They're taxed as partnerships (s863)." Not always.

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Replying to Tax Dragon:
RLI
By lionofludesch
19th Apr 2024 13:03

Tax Dragon wrote:

I don't see much point changing April year end to March. Feb to March yes.

I don't think LLPs would need a specific mention in the new law, would they (btw it is law, not draft)? They're taxed as partnerships (s863).

No. Early in the tax year is fine.

Late in the tax year is disastrous.

But he's already changed the year end.

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Replying to lionofludesch:
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By Tax Dragon
19th Apr 2024 13:19

"Disastrous" is conceivably an exaggeration. OP's client hasn't changed year end; imho best advice doesn't require overstatement of consequences of changing or not changing.

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By Matrix
19th Apr 2024 11:34

LLPs don’t have basis periods, the partners do. Just prepare the accounts to the accounting date the same as any other business.

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By rmillaree
19th Apr 2024 12:45

i might be wrong as i am shooting from the hip here

if you are ok doing two sets of pro rata calcs as part of each tax return then you will be fine.

eg if ye stays 30/4 - then each year it will be 11/12 of one years accounts figures and 1/12 of another years figures.

the problem here is that changing may or may not result in different figures so there is presumably a possibility that chnage might be good news or bad news in that regard

i may be talking nonsense too

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By fawltybasil2575
19th Apr 2024 13:14

@ Jonathan (OP).

LLPs are treated the same as all partnerships.

Whether one amends the end date for the Accounts to 5 April 2024 (any date from 31 March 2024 to 5 April 2024 is acceptable too) or alternatively retains the existing end date for the Accounts, is a judgment call to be considered on a case by case basis (factors other than taxation factors may come into play).

Any "adjustments" for Overlap Relief and Transitional Relief are made not via the Partnership Tax Return but via the individual partners' Tax Returns.

I understand that the IRIS software (whether other software houses are similary afflicted I am unaware!) is disappointingly currently unable to make any appropriate above-mentioned "adjustments" (such comment applies not only to Partnerships but to Sole Traders too).

Basil.

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Replying to fawltybasil2575:
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By JonathanD
22nd Apr 2024 10:41

thanks @fawltybasil for answering my question. The other responses seem not to refer to my situation at all...

Its is an odd situation, as HMRC do not refer to LLPs at all - only 'unincorporated businesses' which an LLP is not.

Yes, we use IRIS, and I have been a little frustrated that they cannot do the adjustments (they are apparently waiting for HMRC to confirm some scenarios before they update the software...)

I didn't want to file the 2023/24 Partnership Return if there ended up being a change to extend the year end..

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Replying to JonathanD:
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By Ardeninian
23rd Apr 2024 15:29

Anyone with a basis period in the context of (what was) Chapter 15 Part 2 ITTOIA is affected. So individual members of a trading LLP are affected: corporate members are not.

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Replying to Ardeninian:
RLI
By lionofludesch
23rd Apr 2024 15:53

Ardeninian wrote:

Anyone with a basis period in the context of (what was) Chapter 15 Part 2 ITTOIA is affected. So individual members of a trading LLP are affected: corporate members are not.

Mmmm - easy to forget that it's the partners who have the basis period, rather than the partnership.

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Replying to Ardeninian:
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By JonathanD
25th Apr 2024 16:47

Thanks for this answer. We've gone with leaving the year end, and advising the individual partners that they need to consider the entries on their returns.

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