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Complete an SA401 form to register with HMRC as an individual partner in a partnership for Self Assessment. The information you provide helps HMRC set up your tax records correctly. Each partner is responsible for their own individual income tax and National Insurance.

What other forms should a partnership complete for HMRC?

When a partnership of two or more partners is formed, one of the partners becomes the ‘nominated partner’. It’s the nominated partner’s responsibility to complete and submit a SA400 form which registers the actual partnership itself with HMRC as an entity for Self Assessment.

It’s still the responsibility of every partner in the partnership to complete and submit their own SA401, though! Partners that are a company or another partnership will need to complete and submit a SA402 form.

When you submit your form SA401, you should also submit a 64-8 form to authorise an agent if you have one acting on your behalf. If an agent is acting on behalf of the partnership and any of the partners, a separate form of authorisation is required for the main partnership and each partner.

 

accounting services for partnerships

Partnership tax returns

Every year, the nominated partner will complete and submit a partnership return for the business. Each partner will also need to complete and submit their own self-assessment tax return, indicating their share of the profits and other income received.

As well as submitting a partnership tax return, the nominated partner must prepare a Partnership Statement. This details the division of profits or losses amongst the partners in the business, and helps each partner complete their individual Self Assessment tax return.

If the main partnership tax return is submitted late or is incorrect, any penalties received are the responsibility of all partners, and not just the nominated partner.

What are the pros and cons of setting up a business partnership?

Although a partnership is a relatively simple way to start a business, each partner is personally liable for any business debts.

It’s wise to draw up a partnership agreement at the start of the relationship. This legal document states the responsibilities for each partner, so everyone understands they’re duties. It will also show the amount of capital raised by each partner, and their share of the profits. The document isn’t a legal requirement, but can be invaluable if a partner leaves or if there are problems.

The partners usually manage the business themselves and share responsibility. In some cases there may be a ‘sleeping partner’ who contributes capital but doesn’t share the daily management. The sleeping partner still shares responsibility for any debts, the same way an ordinary partner does.

The partnership isn’t separate from the partners, like a limited company is. If a partner leaves or dies, the remaining partners are responsible for any business debts or liabilities.

If you would like an online accountant to help you with your partnership, ask us for an instant quote to get started, or call on of our advisors on 020 3355 4047. 

About The Author

Beth-Anne Bruce

I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.

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