PM145150 - Partnerships that include partnerships as partners
Where a partnership (the reporting partnership) includes any partner who is another partnership,
To enable the partners of that other partnership (i.e. the ‘indirect’ partners of the reporting partnership) to complete their own tax returns, then apart from the exception detailed below, the reporting partnership must calculate that partnership’s allocation of profits and losses on the basis that each of the following assumptions apply:
- That it is a UK resident individual;
- That it is a non-UK resident individual;
- That it is a UK resident company;
- That it is a non-UK resident company.
The exception to this is where the reporting partnership provides the name of every person who was an indirect partner during any part of the period, and provides details of whether that partner was an individual, company, partnership (or something else) and/or their residence. In that case only those calculations under (a) to (d) above that are relevant to those partners need be carried out.
When completing partnership statements, where more than one calculation has been required in respect of the partnership that is a partner, the reporting partnership must complete a partnership statement for that partnership to show one set of calculations, and may submit an attachment showing the profits and losses arising from the other calculations. A copy of the partnership statement, and any attachment, should be provided to that partnership.
For the exception to apply, the names and details should be provided in box 3.116 ‘Additional information’, or as an attachment to the return.
Where any calculations under (a) to (d) are identical to each other, a note on a statement to say (for example) that it represents the calculation under both (a) and (d) may be made so that two separate but identical statements need not be attached.
Where a partnership is a partner in another partnership
Any profits or losses that it receives from that other partnership must be shown as from a separate source from their own partnership profits and losses for the purposes of completing their partnership statements. They will need to a) carry out the necessary calculations of their own profits and losses and complete partnership statements for each of their own partners, and b) complete additional partnership statements showing their allocation of the profits or losses from the separate source to each of their own partners, using the relevant calculations provided by the partnership in which they are a partner.
In cases where the partnership has no other business, then a note to the effect that the partnership’s only source is the partnership in which it is a partner may be entered in box 3.116 ‘Additional information’, and only one set of partnership statements prepared.