SCIG12450 - Reaching agreement on income or profit addition: Tax treatment: Extracted income or profits of a partnership

In general the position in partnerships will be the same as for sole proprietors. Division of the diverted partnership income or profits should normally be adopted in computing the additional duty that arises.

We should not accept that only one partner has been fraudulent without referring all partners to CIF and investigating their private affairs thoroughly.

There are cases however where the facts lead us to conclude that one or more members of a partnership are unaware of the irregularities. Difficult matters of confidentiality may arise. The Information Disclosure Guidance should be consulted, and further advice taken as necessary before such behaviour is disclosed to any partner who appears unaware of the fraud.

Under Self Assessment partnerships no longer have a joint and several liability. This can create potential areas of difficulty. There is considerable guidance on this in the Enquiry Manual to which reference should be made in all partnership cases.

However there are circumstances where a settlement may be properly concluded with an individual in respect of partnership as well as individual liability. The Operational Leader’s advice should be obtained before commitments are made and the Technical Manager (Powers and Penalties) may be consulted.