Partnerships (particularly LLPs) are an increasingly popular choice of trading vehicle for businesses, as they provide greater flexibility for members and investors compared to Limited companies.
Our Partnerships team of business tax and personal tax specialists provides expert tax compliance and advisory support to UK based LLPs, LPs and general unincorporated partnerships. We also work with the UK operations of overseas partnerships, drawing on the expertise of our PKF Global colleagues on cross border issues. Although traditionally such businesses will be trading in nature, Partnership structures can also be used for investment purposes.
Partnership tax compliance
Tax advisory services
Salaried partners and corporate members
No just trading partnerships
Partnership tax compliance
Any UK partnership must file an annual Self Assessment tax return and we provide support from the simplest to the most complex partnerships. In preparing any partnership return we consider the correct basis to adopt, which may vary dependent upon whether the partnership has any Corporate Partners.
Partners will also need to file a UK (personal) Self Assessment return to report their partnership share and any other income they have. We work with many of our partnership tax clients to provide an end-to-end service covering both the partnership and individual returns.
Tax advisory services
The nature of partnership structures means that they are subject to specific legislation concerning transactions between partners, and the capital gains implications of members joining and leaving partnerships, particularly where investment is required by new members. Our team is here to help, advising you on the structure of partnership investments and the tax reliefs available.
A unique feature of partnerships is that the profit (or loss) for the year must be allocated between partners, both for accounting and taxation purposes, which sometimes may be different. This is particularly the case in years where profits are modest, but partners extract drawings in a higher amount. We give a clear presentation to our partnership clients so they can understand the issues arising.
Salaried partners and corporate members
Changes in partnership legislation in recent years have added complexity to partnerships, particularly where individuals are partners in an LLP and draw a fixed salary. Often, their income may be re-categorised as employment income through PAYE rather than profit share for tax purposes, which if not identified correctly, can lead to a significant build up of tax risk. We help our clients understand the rules to identify which partners may be affected and ensure that the steps taken to admit new partners provide certainty in respect of the tax consequences.
Where companies are owned by individual partners and take a stake in the partnership, other rules apply to challenge any non-commercial sharing of profits and it is important that our clients understand the consequences for their business.
Not just trading partnerships
Although many of our Partnership clients carry out a trade, we also act for partnership structures in the investment fund and property investment sectors with specific requirements, rules and practices. Our tailored advisory services take in a range of requirements from different stakeholders, and often consider overseas taxation consequences where we combine our knowledge of UK tax with that of our global specialists across PKF Global.
