Running a partnership company comes with a variety of administrative chores — one of the most important being submitting an annual tax return to HMRC. Unlike sole traders or limited companies, partnerships have distinct tax filing requirements involving both the partnership entity and the individual partners.
Understanding when and how to file a partnership tax return can avoid your business costly fines and keep it compliant with UK taxation law. Below, we outline the fundamentals of filing a partnership tax return and how UK Property Accountants can simplify the process.
What Is a Partnership Return?
A partnership tax return, or a SA800 form, is an annual return that must be submitted to HMRC by every partnership that is trading within the UK. The return will specify the profits, the costs, and the overall financial performance of the partnership within the tax year.
The proportion of each partner in the profit or loss is also taken into account, which will then be separately reported through their own tax returns. All those partnerships involving property income, professional services, or retail trade are all covered under this very same requirement.
Who Needs to File?
The nominated partner — typically agreed between partners — must prepare the partnership tax return. The nominated partner will be the main point of contact with HMRC and be responsible for filling in the SA800 form accurately and on time.
But the individual partner must also file a personal self-employment tax return, reporting his share of the partnership income or loss. Failure to file either form carries penalties against the partnership as well as the individual partners.
Deadlines and Penalties
Fiscal year is 6 April to 5 April the following year, and the partnership tax return is due for filing by 31 October (paper) or 31 January (online) following the end of the fiscal year. These deadlines incur automatic penalties of at least £100 rising with greater tardiness.
It is better to get the financial data in advance, i.e., partnership revenues, expenses, and division of profits, to avoid last-minute troubles.
Common Mistakes to Avoid
One of the most frequent errors in filling out partnership tax returns is sharing profits or losses between partners improperly. Another is omitting deductible expenses, incurring unnecessary extra tax bills.
Also, failure to match up figures on individual partners’ returns with those filed on the partnership return can initiate HMRC inquiry and potential penalties.
Conclusion
Making a partnership tax return is a requirement by law for all UK partnerships and partners. Staying in line with deadlines and being precise with your returns is crucial to remain compliant and avoid penalties.
For those requiring professional help, UK Property Accountants provides reliable, efficient help to file partnership tax return for you. With their help, partnership businesses can focus on growth while staying tax-compliant throughout the year.
