B7.401 Calculation of partnership trading income
Partnership trading profits/losses are computed in accordance with the general rules that apply for all trades (see Division B2.1 onwards) and, for corporate partners, for all companies (see Division D1.12).
Depending on the status of the partners, it may be necessary to prepare more than one computation of the profits/losses. For example if one partner is an individual and another is a company, the trading profits will need to be prepared under both the income tax provisions1 and corporate tax provisions2.
Similarly, if one of the partners is non-UK resident a computation has to be made according to the rules applicable to a trade carried on by such an individual, ie based on the profits earned in the UK3.
Note that limited liability partnerships (LLPs) cannot use the cash basis (B2.112) for small businesses4.
The computation is prepared for the period for which the partnership makes up its accounts (the relevant accounting period). When calculating the profits of the trade no account should be taken of losses for another period5.
There may also be occasion to revise the partnership computation of capital allowances and balancing charges6 because, where a company joins or leaves a partnership it is treated as acquiring or ceasing a source of income and commencing or ceasing to trade as appropriate7. See B3.109, B3.390.
The Government has set out a package of temporary, targeted