A situation has been developing for some time in that the partnership (fairly large > 12 partners, professional firm) refuses to sign off on the accounts and resulting tax return for 5th April 2017 and now likely 2018. I do not act in anyway for the firm and have no notion as to what the dispute is about however it seems it divides the firm.
Although I have since filed my own client's return for 5th April 2017 on a provisional basis and probably will do the same for 5th April 2018, the penalty notices are becoming a source of increased worry & frustration - I have written to HMRC many times but they are either unable or unwilling to do anything until the Partnership Return is submitted.
Can anyone suggest how this might be resolved?
Replies (59)
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Seriously - not your problem.
Leave them to it. Don't get involved. Let the firm who deals with the partnership affairs deal with it.
This is one of the ridiculous anomalies of the penalty system.
The penalties for the late filing of the partnership tax return are levied on the individual partners, but said individual partners do not have it within their control to deal with the situation. Similarly HMRC won't accept an appeal from anyone other than the nominated partner!
If I were him, I'd seriously consider whether these people were the sort of people I'd want for partners.
What happened to uberrima fides ?
It is a ridiculous system.
Mark McLaughin wrote a really good article in Taxation magazine a few years ago....looks like nothing has changed since then! www.taxation.co.uk/Articles/2012/11/21/50151/out-cold
How can you sue the current accountants? If the nominated partner refuses to sign the accounts and tax return, the accountants can't force him.
Maybe he won't sign because the accounts are wrong.
Maybe that's the accountants' fault.
We don't know.
so the accountants wont tell him who is the nominated partner - they bloody well should - they act for the partnership not for the individual. He should ask for and receive a full copy of the last submitted return from either or both the accountants or HMRC
Yes the accountant should tell the partner who the nominated partner is.
But they should still not be sued. If the accounts are wrong, the partners should discuss them and request changes to be made.
they wont tell the partner who is the nominated partner, of course they should be sued a complete dereliction of duty that is costing all the other parties penalties and therefore its not just negligence its deliberate.
How can it be a complete dereliction of duty when they have prepared the accounts and Tax Return? There is obviously a massive problem within the partnership that needs to be resolved.
I would suggest to the partner to look at the partnership agreement to see if there is any way round the impasse (majority vote?) rather than to sue the accountant.
How can it be a complete dereliction of duty when they have prepared the accounts and Tax Return?
They won't say who the nominated partner is.
What I'd like to know is why is that a secret ?
What happens at partners' meetings ?
Maybe what happens at partners' meetings stays at partners' meetings.
Happen, aye. But the partner who's complaining ought to be there.
More like 1 angry man, 3 or four annoyed and the rest indifferent - not quite as catchy
I'd go to the pictures to see that fillum.
the answer is a conclave lock 'em in a room till they come up with an answer, same applies to HoP re Brexit
SAM101290 Records: Nominated Partner
https://www.gov.uk/hmrc-internal-manuals/self-assessment-manual/sam101290
The manual mentions form SA670, but I can't find the form anywhere on the HMRC/Gov site.
I have never filled one of these forms in and am beginning to wonder whether it is a mythical beast...
Professional firm of solicitors/surveyors?
Write to their professional body for guidance.
The failure to address HMRC matters may be indicative of other shortcomings.
A red flag that that should not be ignored?
A firm of accountants behaving like this would probably be up before the disciplinary committee.
Perhaps the partner(s) suffering as a result should take control----- Parliament has set a precedent .
Do you not think that could amount to a breach of confidentiality possibly resulting in you being reported to your own professional body?Professional firm of solicitors/surveyors?
Write to their professional body for guidance.
The failure to address HMRC matters may be indicative of other shortcomings.
A red flag that that should not be ignored?
A firm of accountants behaving like this would probably be up before the disciplinary committee.
Perhaps the partner(s) suffering as a result should take control----- Parliament has set a precedent .
This is basically what happed to the Beatles and what led Paul McCartney to go the High Court to dissolve the band.
I'm not a lawyer and would be interested to see any views, but I understood "nominated partner" to mean the individual who is acting on behalf of the other partners.
I can't see how an NP can refuse to act if all the partners agree.
As others have said, this is not a problem for the accountant but one for the partnership as a whole, who currently appear not to be meeting their legal obligations because of the inaction of one individual.
Surely a partner can make a request the partnership nominates [name] as the nominated partner for the purposes of submitting the PTR. That at least will bring it into the open and (if they agree on a person) then inform HMRC (and the accountants) directly...
the HMRC guidance indicates that the form isn't compulsory
I believe the nominated partner is simply the partner chosen by the other partners to sign the form for that year on behalf of the partnership. Any partner can sign with the appropriate authority under the partnership agreement. However, if the accounts have not been adopted by the partnership, the profit which is the starting point of the tax computation, is not known. They could however file a return with provisional figures (and draft accounts if required).
I agree- but HMRC have always been reluctant to accept changes of nominated partner. No idea why - none of their business, so far as I can see.
its time for someone to take a very strict line with them and ask them to set out exactly what their differences are. I suspect that the fines are neither here nor there but they should be advised re the penalties for late payment of tax , i wonder what the partnership secretary (if one exists) is doing?
.... I wonder what the partnership secretary (if one exists) is doing?
I would imagine he's holding his head in his hands and sobbing uncontrollably.
@ Roland195 (OP).
Frankly, this is more of a legal question than an accountancy one since, at its heart, are:-
(i) The need for the Partnership Accounts to be agreed in accordance with the Partnership Agreement, both because those Accounts need to be agreed per se, but also to enable the Partnership Tax Return to be prepared therefrom (albeit a “provisional” Tax Return is a “second best” option if the Partnership Accounts cannot be agreed - there may be terms in the Partnership Agreement to state how any dispute re the Partnership Accounts should be resolved).
(ii) Establishing the terms of the Partnership Accountants’ Engagement Letter [albeit less important than (i)].
I would thus respectfully suggest that you consider recommending the client to appoint solicitors to handle the entire matter.
If however you believe that you are sufficiently experienced to deal with the legal aspects of this matter, then your client (or you on his behalf) should request (if not already seen):-
(i) the Partnership Agreement,
(ii) the Accountants’ Engagement Letter, and
(iii) a copy of the Partnership Tax Return Notices for 2016/17 and 2017/18
from:-
(a) The Partners (in a formal letter to the Partnership),
(b) HMRC,
(c) The Partnership Accountants.
Hence you should request (i) from (a) and (c); (ii) from (a) and (c); and (iii) from (a), (b) and (c).
[You may of course, whether validly or otherwise, receive no responses or “no intention to accede to your request” responses, in reply to these requests, but your next actions will depend upon the responses received and/or declined].
I am somewhat concerned by your comment that you “have no notion as to what the dispute is about": in intending no offence, you MUST ascertain "what the dispute is about".
Albeit not central to the issues, you may wish to read the important wording of a Partnership Tax Return Notice (re nominated partners), here:-
https://assets.publishing.service.gov.uk/government/uploads/system/uploa...
Basil.
A solicitor won't make them agree.
Maybe they should consider whether they should be in a partnership if they have such fundamental disagreements.
http://www.legislation.gov.uk/ukpga/Vict/53-54/39?view=extent
Start going through above to push matters to a head would be my route, ideally with a solicitor in tow. (se 28 in particular)
See both 24 re profit division and governance, if the issue, and 28 re accountability to the others.
There is surely either a partnership agreement governing the point or a fall back on the 1890 Act and its terms re sharing profits in the absence of specifics in the partnership agreement, if profits are the issue.
Ok Nothing in the partnership agreement concerning the nominated partner. Who has the power to change it? If a majority are there sufficient partners to do this.
I look forward to further comments from others on Awb.
I suspect this will become more of a problem as time goes on...
CIOT did try to make representations to the Public Bill Committee a couple of years ago, but apparently the Government did not take on board all the points raised. CIOT published a statement in January 2018 stating:
"....For example, the amendments included in Part 5 of the Schedule do nothing to improve the situation where partners with little influence in the partnership have imposed on them a penalty for a late partnership return where the partnership’s nominated partner has
not submitted the partnership return on time. Compare this to a company where only the company gets a penalty, not each shareholder/director. We think it would have been fairer if the legislation had been amended so that the penalty for a late return is imposed on either the partnership or the nominated partner rather each partner".
So common sense is still not prevailing....