Chapter 17 Introduction to Partnerships Flashcards
17.2 Partnership agreement
The partnership agreement states how profits and losses should be shared, rules on admitting a new partner and the retirement of a partner (notice periods). It should also cover conduct of partners and the ownership of assets.
17.4 Partnership self-assessment
A partnership must register immediately with HMRC by the nominated partner. The filing deadlines for a partnership tax return are the normal self-assessment filing deadlines, 31 January following the tax year. If the return is late all partners are liable for penalties. £100 for each partner automatically, daily penalty of £10 per day for 90 days, another £300 if the return is 6 and then 12 months late.
The rules in respect of amendments and enquires apply the same. An enquiry into a partnership return automatically extends to the partners’ own returns.
17.6 Relief for qualifying loan interest
Individuals invited to a partnership are normally required to make a capital contribution to the partnership. This loan is a qualifying loan for tax purposes, interest paid on the loan by the individual is a deductible payment. There is a cap on the total amount of reliefs which can be deducted and this is included in the cap.
