Proposed changes to partnership taxation
HMRC are concerned that complex business structures involving partnerships are enabling certain people to avoid paying tax that is due in the UK. While we support strongly the proposition that everyone should pay the correct amount of tax we have some reservations about the proposals made by HMRC. Many of the proposals are aimed at very large businesses, but could still affect some partnerships with very modest profits.
There are two main areas where we have concerns. First, if the nominated partner is unable to identify all of the ultimate sharers of profits, then it is proposed that the tax due on any profits attributable to those ‘unknown’ partners should be paid by the partnership, even if the partnership holds no funds on behalf of those ‘unknown’ partners. Second, it is proposed that partners would have to report on their own tax return their share of profit as reported by the partnership – even if they knew or believed that the figure reported by the partnership was incorrect. This latter proposal would be at odds with an individual’s requirement to certify that their tax return contained ‘correct and complete’ information.
The consultation document may be found on GOV.UK and our response is here:
Gillian Wrigley