LLP help needed

Newbie

I have a potential client who has a LLP, it was formed in Aug 10 so year end Aug 11, however I believe a partnership return should have been submitted to HMRC by January 12, in fact the LLP was never registered with HMRC hence penalties etc, I believe a partnership return should be filed but Im after confimation of the period required by HMRC is it August to April 11, so I would effectively be preparing two sents of accounts? any guidance much appreciated

jamesm96

Newbie wrote: »

I have a potential client who has a LLP, it was formed in Aug 10 so year end Aug 11, however I believe a partnership return should have been submitted to HMRC by January 12, in fact the LLP was never registered with HMRC hence penalties etc, I believe a partnership return should be filed but Im after confimation of the period required by HMRC is it August to April 11, so I would effectively be preparing two sents of accounts? any guidance much appreciated

Hi Newbie,

As far as I'm aware, it depends on whether it's a new business or just a new entity. I'll stand corrected but this is my understanding:

The LLP itself isn't taxed as you know, so the partners are deemed to be carrying on a trade, the income from which is made up of their share of the income from the partnership. If the LLP replaced an old (1890) Partnership, i.e. if the LLP continues the same trade as the old Partnership did, then the Trades of each respective partner are considered to be continuing. On the assumption that the old Partnership also prepared accounts to 31 August, the 2011 SA return (due by 31 Jan 12) would simply show the income from the old Partnership to 31 August 2010, and the 2012 SA return will show the income from the period (in the LLP) to 31 August 2011, as though nothing's changed.

If, though, it's a new LLP and a new business / trade, then the same basis rules apply as for any partnership or sole trade (i.e. if trade commences in Aug 10, then then 2011 SA return needs to show the income from that Partnership (LLP) from Aug 10 to 5 April 11.

I'm not sure if you can use estimates or not (to avoid having to prepare two sets of accounts in the first year), but if you did you'd still have to amend the return anyway once the actual accounts were prepared.

Also, if the LLP didn't start trading immediately (i.e. if it didn't start trading until after 6 April 2011) then I believe there's no need for a return either.

Newbie

thanks for the comprehensive reply James, prior to the LLP the owner was a sole trader preparing accounts to 30th April, he with another partner formed the LLP, the owner has continued his sole trader business and invoices the LLP partnership fees as does the other partner, and the income is declared on their personal tax returns, therefore the LLP should have little profit but im still slightly unsure on the periods to be reported on the partnership to HMRC, incidentally from April 12 all is being transferred to a limited company going forward!