Commentary

B7.406 Calculation of partnership gains

Business tax
Business tax | Commentary

B7.406 Calculation of partnership gains

Business tax | Commentary

Partnership capital gains

B7.406 Calculation of partnership gains

Where two or more persons carry on a trade or business in partnership any chargeable gains on the disposal of partnership assets are calculated in the usual manner (see C2.230). These are then assessed on the partners separately. Any partnership dealings are treated as dealings by the individual partners and not by the partnership as such. This legislation applies to partnerships in Scotland as well as elsewhere in the UK, even though a Scottish partnership is a legal person.

The gains to be assessed are those realised by individual partners1; for this purpose HMRC considers that each partner has to be treated as owning a share of each partnership asset, not an interest in the partnership as a whole2 and its market value will be taken as a fraction of the value of the total partnership interest in the asset without any discount for the size of the share. Thus, if a retiring partner sells his interest in a partnership to an incoming partner, he is treated as having sold his interest in each of the partnership's assets, and a chargeable gain or allowable loss will only arise in respect of any gain or loss attributable to the chargeable assets.

This means that no assessment to capital gains tax can be raised on a partnership. The assessments on the partners in respect of partnership gains

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial