Will Farmer FMAAT 
February 25, 2022

Partnerships – An Overview

Getting Set Up

In a partnership, you and your partner(s) personally share responsibility for your business, this includes;

-       any profits or losses your business makes

-       the cost of expenses for items you buy for your business

Partners share the business’s profits, and each partner pays tax on their share of profits via a self-assessment tax return.

A partner does not have to be an actual person. For example, a limited company counts as a‘legal person’ and can also be a partner.

 

*Please note, there are different rules for limited partnerships and limited liability partnerships(LLPs).

 

What Is Required?

When you set up a business partnership you will need to:

-       choose a partnership name

-       choose who will be the ‘nominated partner’

-       register with HMRC (more details on this below)

The ‘nominated partner’ is responsible for managing the partnership’s tax returns and keeping copies of the business records.

 

Registering with HMRC

You must register your partnership for self-assessment with HMRC if you are the‘nominated partner’. As the ‘nominated partner’ you are responsible for sending the partnership tax return to HMRC each year.

The other partners will also need to register for self-assessment separately and complete and file their own tax returns as individuals.

You must register by 5 October in your business’s second tax year, or you could be charged a penalty. E.g. - If you started a partnership or became a partner during the 2021/2022 tax year, you must register before 5th October 2022.

You can register the partnership using form SA400 if you cannot register online. You can register as a partner using form SA401.

You can appoint an authorised agent such as your accountant to deal with HMRC on your behalf.