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partnership tax return first year

partnership tax return first year

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We have a partnership with a year end 30.12.20, should we produce a nil partnership return for the 5.4.20 period and then put the period 1.1.20 to 5.4.20 on the partners returns, then the full year to 31.12.20 on the partnership return 5.4.21 and follow this through to the individual partners returns 5.4.21 and carry forward the 5.4.20 income as overlap profits. 

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By johngroganjga
20th Jan 2022 18:26

Have they taken advice on what year end to have in the light of the forthcoming tax changes?

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Replying to johngroganjga:
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By CW2012
20th Jan 2022 18:42

I did try to get them to have a 5th April or 31st March year end and they were adamant they wanted a calendar year end, what can you do , horse water etc.

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By Catherine Newman
20th Jan 2022 18:42

I can't even start to comprehend this with 11 days to go to the amendment window for 2020.

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Replying to Catherine Newman:
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By CW2012
20th Jan 2022 18:54

There's not a great deal I can do about it, this is what I inherited, the question is am I right in what I intend to do.

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By Catherine Newman
20th Jan 2022 19:25

No. The partnership return runs to 31 December 2020 and the reporting of the partners' share flows through to the tax return. The partners should have filed returns by 31 January 2021 showing the figures were provisional. This is why I am saying you have 11 days to file an amended return.

I have a client who became a partner in his family partnership a couple of years ago .
The year end was 31 December. I contacted the family partnership accountants and asked for an estimate and I just had to put the partnership reference in but tick provisional and put the estimate of £1,000 in. As per earlier threads my client was copied into it so knew what I was doing. Luckily the partnership accountants have given me the figures for the year ended 31 December 2020 so that I have been able to file an amended return on time. The information was copied into me and my client and thanked by client to me and the accountant.

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Replying to Catherine Newman:
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By Tax Dragon
20th Jan 2022 21:26
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RLI
By lionofludesch
20th Jan 2022 23:38

No, it certainly isn't right.

You need to include profits to 5th April 2021 on the 2021 partnership return. A nil return won't do.

These will be numerically equal to the overlap generated by the submission of the 2022 return (give or take a few quid, as the first period is slightly more than a year).

Tell your clients to get used to submitting estimated returns because, if the current plan comes into force, you'll be doing that every year.

What can you do? Increase your fees to cover the entirely pointless additional cost.

*I'm guessing that, when you say the year end is 30.12.20, you actually mean the trade started then.

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By Calculatorboy
21st Jan 2022 00:43

I despair...the key is box 9 sa104 ..if ever there were a case for regulation

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Replying to Calculatorboy:
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By Tax Dragon
21st Jan 2022 02:43

Which is in accordance with what the OP was proposing to do.

Was anything the OP said wrong? Catherine N and lion say yes, Cathy G and TD say no.

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Replying to Tax Dragon:
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By rmillaree
21st Jan 2022 08:57

Seems a bit kafkaesque this thread - i had six pints last night aint had my morning coffee yet and my brain obviously isnt fully engaged but i have looked at what the op has posted and it looks perfectly correct to me as far as the important bit ref the personal tax returns are concerned.

Pretty sure op is saying
ye 31/12/20 - 12 months period
proportion of 12 months to 5/4/20 allocated on partners 2020 returns
full year on partners 21 returns
proportion to 5/4/20 carried forward as overlap.

That seems spot on correct to me ?
I am wary about relying on memories for anything partnership and anything overlap related so happy to have egg on my face with this one in which case i will blame the beer and lack of coffee and january stress. If op and i are wrong what is exactly is wrong ref profits entered on individual returns.

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Replying to rmillaree:
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By Tax Dragon
21st Jan 2022 09:40

Let's give your six pints the casting vote. (That's how tax works, didn't you know?)

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Replying to Tax Dragon:
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By rmillaree
21st Jan 2022 09:49

Certainly once you get to 50 everything needs a bit of lubricating to work ! hmmm what did i just say?

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Replying to rmillaree:
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By Hugo Fair
21st Jan 2022 12:47

Well, if you had 50 pints then all bets are off!

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Replying to Tax Dragon:
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By Calculatorboy
22nd Jan 2022 22:10

So it's basically knowledge? Why post if you are uncertain about basic principles ?

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By CW2012
21st Jan 2022 09:17

Thanks for the replies, I will be going back over them again later, there does seem to be a split decision as to whether the partnership return for 5.4.20 is nil or not, I think and I am very very rusty on this that the partnership return should show an accounting period ending in the return period, and there isn't one so a nil return would be correct if I right. I am happy to be wrong if I have learnt something

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Replying to CW2012:
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By rmillaree
21st Jan 2022 09:36

"Thanks for the replies, I will be going back over them again later, there does seem to be a split decision as to whether the partnership return for 5.4.20 is nil or not"

I think the best thing here first up is for everyone to agree wehther whats on the personal partners returns is correct or not. Even this isnt clear to me - are some peeps here saying what you have on the personal returns is wrong (looks fine to me) ?.
If we are all agreed on the info on the perosanl returns being right then we can move onto the secondary issue of how you got there - thats perhaps not so important in the scheme of things.

CW2012 - i think the only part of your original post that was not 100% clear and may be causing confusion perhaps is the following statement

" put the period 1.1.20 to 5.4.20 on the partners returns"

When you state this - can you please confirm that you will be taking the first prepared 31.12.20 accounts and taking pro rata figures to to 5/4/20 including these amounts on the 2020 individual returns - as calculator boy has confirmed presumably you would be using box 9 to bring in the relevant amount. Pretty sure thats what you are proposing i think perhaps some may not have realised this is the case? perhaps its me heading into kafka territory?

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Replying to rmillaree:
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By Tax Dragon
21st Jan 2022 09:42

Sorry yes - this is how I've read it too. (Hence the mention of overlap, too.)

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Replying to rmillaree:
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By CW2012
21st Jan 2022 10:32

When you state this - can you please confirm that you will be taking the first prepared 31.12.20 accounts and taking pro rata figures to to 5/4/20 including these amounts on the 2020 individual returns - as calculator boy has confirmed presumably you would be using box 9 to bring in the relevant amount

Thanks yes this is what I am intending to do.

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By Catherine Newman
21st Jan 2022 16:42

I use PTP software and you do a partnership return and split the profit share out among the partners. When you do the partners' returns you just click on partnership pages. The UTRs look through to each other and the profit is downloaded. With a year ended of December, nothing would come down for the first quarter as the partnership return will not have been prepared.

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Replying to Catherine Newman:
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By Tax Dragon
21st Jan 2022 16:52

That's why box 9 exists - the bit that software can't do.

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Replying to Tax Dragon:
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By Catherine Newman
21st Jan 2022 17:38

I liaise with a big firm in Cheltenham and they appear to do it the way I do it and have sent me the partnership summary for year ended 31 December 2020 so that I can file an amended return on time.

The problem raised its ugly head in 2019/20. I rang the other accountants up and asked what they I recommended I put and they have told me they will notify me every year, which they do. This is, however, not a new partnership. He and a sibling were brought in as new partners.

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Replying to Catherine Newman:
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By rmillaree
21st Jan 2022 17:50

" With a year ended of December, nothing would come down for the first quarter as the partnership return will not have been prepared."

As tax dragon has confirmed box 9 exists to make sure you end up with the correct totals here on the individual return. Nil pulls through from partnership 2020 return and you include in box 9 the necessary amount to get the proportion of profits in up to 5/4/2020 . You are correct that at filing date 31/1/2021 these figures may well have originally ben estimated but the op's calcs are 100% correct as far as i can see. If you disagree can you advise what you think is wrong ref op's calcs .

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