Share this content
14

Limited Liability Partnership tax return?

LLP tax return

Didn't find your answer?

Hi everyone

Just a brief query - is there a requirement for an LLP to actually file a tax return (Corporation or Partnership)? or is it a case of splitting remuneration and reporting on individual partners tax returns?

Replies (14)

Please login or register to join the discussion.

avatar
By Wanderer
14th Aug 2019 13:04

Partnership Tax Return.

Thanks (1)
RLI
By lionofludesch
14th Aug 2019 13:11

Dorset, I hope you have an accountant as your understanding of tax and accounting seems seriously vague.

Thanks (0)
Stepurhan
By stepurhan
14th Aug 2019 13:25

LLPs are partnerships for tax purposes.

That is one of the simplest aspects of LLPs. If you are uncertain on this point you are best of passing the work on LLPs to someone else.

Thanks (0)
avatar
By Tax Dragon
14th Aug 2019 13:51

I detect a rather familiar nose (to misquote Blackadder).

Is it the whiff of PAYE being applied to something that isn't taxable as employment income?

Thanks (1)
avatar
By Paul Hawes
14th Aug 2019 14:38

There are a lot of potential queries implied by this brief query.

Thanks (0)
avatar
By MJShone
14th Aug 2019 16:19

The £100 penalty for a late tax return applies per partner in the case of a partnership - so make sure one is filed on time.

Thanks (0)
avatar
By unearned luck
14th Aug 2019 22:51

Commiserations to those above who answered “partnership tax return” or that LLPs are partnerships for tax purposes. Better luck next time.

The correct answer is a corporation tax return is required if the LLP is not carrying on a trade and a partnership return if it is. The dearth of facts makes, I think, any assumption regarding whether or not a trade is being carried on unjustified and, in any case, the question was asked in the abstract.

The respondent who foolhardily claimed that “That is one of the simplest aspects of LLPs” is recommended to read the FTT and UT decisions in Ingenious. A case that has so far taken 71 court days and involved more tax barristers that I can shake a stick at to decide whether or not the appellant LLPs were carrying on a trade.

The answer in Ingenious, if the UT decision is not reversed, is ‘no’. Which raises the intriguing question: are the deemed enquires into the ‘partners’’ tax returns valid?

Thanks (0)
Replying to unearned luck:
avatar
By Tax Dragon
14th Aug 2019 22:24

Trade or business.

If the members are drawing "remuneration", the assumption made is not unreasonable (though assumptions made in the perpetual Aweb OP fact vacuum should be stated).

Thanks (1)
Replying to Tax Dragon:
avatar
By unearned luck
14th Aug 2019 23:03

"Remuneration" is a slightly odd word to use if drawings is meant. I don't think anything should be read in to its use. On the other hand the OP is wise enough not to assume an answer to his question.

Thanks (0)
Replying to unearned luck:
avatar
By Tax Dragon
15th Aug 2019 09:32

unearned luck wrote:

"Remuneration" is a slightly odd word to use if drawings is meant. I don't think anything should be read in to its use.

How many LLPs that do not have a business operated for profit can afford to "remunerate" (whatever that means) their members?

How much were the Ingenious members paid?

It is an interesting point you make about the enquiries. Will Tooth bite again?

Thanks (0)
Replying to Tax Dragon:
avatar
By unearned luck
15th Aug 2019 22:13

On reflection a better answer to your point is:

'The question was asked in the abstract. The OP may well have a trading LLP in front of him this week but next week he may have an investment LLP, or one run by dilettantes (and thereby lacking the ‘view to a profit’ criterion) and thus the SA800 answers would have led the OP astray. Perhaps LLPs that don’t meet the IT treatment criteria are uncommon, but advisers still need to know that it is not quite as simple as LLPs are always transparent.'

BTW, the dividing line isn’t that between trade and business* but that between those things plus professions and ‘non-business’. And I appreciate that I could have been more precise in my original response (I only mentioned ‘trade’). Perhaps LLPs that don’t meet the IT treatment criteria are uncommon, but advisers still need to know that it is not quite as simple as 'LLPs are always transparent'.

*ITTOIA2005, s863(1): “For income tax purposes, if a limited liability partnership carries on a trade, profession or business with a view to profit–….” (whatever happened to vocations?)

Thanks (0)
Replying to unearned luck:
avatar
By Tax Dragon
15th Aug 2019 22:46

I am (always!) happy to agree. In the abstract, the (non-dormant) LLP always needs to make a return; it is never just a matter of splitting remuneration - whatever that does mean.

Vocations are always personal. The other things can sometimes not be - e.g. many accountancy practices (supposedly professional, though following this forum too closely might make you wonder) are LLPs.

Thanks (0)
Replying to unearned luck:
avatar
By Wanderer
15th Aug 2019 03:54

In the MAJORITY of internet discussion forums there inevitably has to be an element of inferred / assumed facts.

There's almost always a particular situation when advice would be different or varied if 100% of the background to a question is known.

e.g. your answer probably makes the assumption that the OP is referring to a UK LLP and / or UK tax consequences. Not an unreasonable assumption but possibly no more unreasonable than the assumptions made by other respondents.

Thanks (0)
Replying to unearned luck:
Stepurhan
By stepurhan
15th Aug 2019 09:00

In the absence of any other information, the assumption that the LLP in question is a not unreasonable one. I acknowledge that non-trading LLPs don't complete partnership returns, but are you asserting they are common?

But here we see the eternal problem with OPs that make "Just a brief query". A simple search would be enough to make it clear that some return for the LLP itself is required. Instead they pose a question here that appears to assume this is the only potential issue. An OP that has not done the most basic of research is unlikely to understand the other complexities of (trading) LLPs.

Thanks (0)
Share this content