ICTA88/S349 (2)(b) requires that yearly interest paid by or on
behalf of a company partnership be paid under deduction of tax (see
AP92 (d)).
The tax deducted from such payments is to be paid over to the
Revenue. You should apportion the amount of the interest paid among
the partners, both individual and corporate, in accordance with the
partnership sharing arrangements of the accounting period.
You should deal with the amount of interest paid that has
been apportioned to each company partner as if it were a payment of
interest made independently by that company and tax accounted for
under the normal rules of ICTA88/SCH16 (see
CTM35100 onwards).
You should also deal with the amount of interest paid that
has been apportioned to each individual partner as if it were a
payment made independently by that partner and tax accounted for
under ICTA88/S350 at the appropriate rate. (You should note that
the obligation to make a Section 350 return is a free-standing one,
additional to the SA return the individual is required to make.)
ICTA88/S349 (1) requires that certain annual payments etc are
also paid under deduction of tax. This applies to all company
payers, but broadly, only to an individual payer whose personal
income charged at the basic rate in the year is less than the total
annual payments they make. You should therefore apportion to each
of the partners (both companies and individuals) the amount of
annual payments, etc made by a company partnership in accordance
with the partnership sharing arrangements in force in the relevant
period. Each company partner should account for its own share under
the normal rules of ICTA88/SCH16. Any individual partner to whom
the deduction obligation exceptionally applies should make a return
of their own share under ICTA88/S350 at the appropriate rate. (This
obligation is additional to one that requires them to make a SA
return.)
Where on or after
1 April 2001 interest is paid by a partnership,
one of whose members is a company, or the recipient is a
partnership all of whose members are UK resident companies you
should refer to the guidance at
CTM35215.
