I prepare balance sheets for my partnership clients but not for my sole trader clients. I assume it is not possible to submit a partnership tax return without completing the balance sheet boxes but does anyone know the answer?
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In theory you can but, if a balance sheet exists, you're supposed to enter it on the return.
That goes for sole traders too.
Having a balance sheet supposedly reduces the risk of an enquiry but, as enquiries are few and far between, I'm not sure that's a major concern.
Although the HMRC guidance to completing a tax return asks for balance sheet figures to be included wwhere one exists there is no statutory requirement to return balance sheet figures, since all this is required by statute is that the partnership makes a return of the amount in which each partner is chargeable to income tax (TMA 1970 s12AA) and a balance sheet is not necessary to arrive at that amount . Where partnership turnover exceeds £15 million HMRC ask in the guidance to completing tax returns for accounts to be filed with the return. This turnover limit is not laid down in statute, as far as I am aware, but HMRC might be able to rely upon Sections 12AA(2) and (3) to insist upon them.
These days accounts production software produces detailed p&l and balance sheet entries as the norm
Not sure what point you're making here, Chris.
Can no-one produce accounts without software any more ?
Thanks all. I am expecting the figures by Thursday so at present cannot even complete a P&L!
I will have to complete balance sheet workings anyway (no bookkeeping system) and the balance sheet was always provided in the past so will probably complete this section to be consistent. It is a days work either way.
(I go to the same gym as the client and I was more concerned about his tax return than he was (I didn't mention it every time I saw him since 5 April but may do next year). There will be a premium.)
We have one partnership client who prepares their own income and expenditure account for the partnership but we do the partnership tax return and the personal ones.
They not want to pay for a set of accounts to be produced, they just want the partnership figures taken from their spreadsheets and put on a tax return.
We've been doing this for a few years now and no balance sheet figures have been put on the tax return. They were made aware that HMRC prefer a balance sheet but again the lower fee was more important to them.
This was really the basis for my question, whether there could be less work and therefore a lower fee (and not having to work this weekend). Since this partnership always submitted a balance sheet in the past then I think I will be consistent but it is good to know that it is not mandatory.