Statement of practice D12: full text

By Tolley

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Statement of practice D12: full text
  • D12: Partnerships
  • 1 Valuation of a partner’s share in a partnership asset
  • 2 Disposals of assets by a partnership
  • 3 Partnership assets divided in kind among the partners
  • 4 Changes in partnership sharing ratios
  • 5 Adjustment through the accounts
  • 6 Payments outside the accounts
  • 7 Transfers between persons not at arm’s length
  • 8 Annuities provided by partnerships
  • 9 Mergers
  • 10 Shares acquired in stages
  • 11 Elections under TCGA 1992, Sch 2, Para 4
  • 12 Partnership goodwill and taper relief

Note:This is a verbatim copy of Statement of Practice D12. It was revised in September 2014 following recommendations made by the Office of Tax Simplification (see below).

D12: Partnerships

This statement of practice was originally issued by The Commissioners for HMRC on 17 January 1975 following discussions with the Law Society and the Allied Accountancy Bodies on the Capital Gains Tax treatment of partnerships. This statement sets out a number of points of general practice which have been agreed in respect of partnerships to which TCGA 1992, s 59 applies.

The enactment of the Limited Liability Partnership Act 2000, has created, from April 2001, the concept of limited liability partnerships (as bodies corporate) in UK law. In conjunction with this, new Capital Gains Tax provisions dealing with such partnerships have been introduced through TCGA 1992, s 59A. TCGA 1992, s 59A(1) mirrors TCGA 1992, s 59 in treating any dealings in chargeable assets by a limited liability partnership as dealings by the individual members, as partners, for Capital Gains Tax purposes. Each member of a limited liability partnership to which TCGA 1992, s 59A(1) applies has therefore to be regarded, like a partner in any other (non-corporate) partnership, as owning a fractional share of each of the partnership assets and not an interest in the partnership itself.

This statement of practice has therefore been extended to limited liability partnerships which meet the requirements of TCGA 1992, s 59A(1), such that capital gains of a partnership fall to be charged on its members as partners. Accordingly, in the text of the statement of practice, all references to a ‘partnership’ or ‘firm’ include reference to limited liability partnerships to which TCGA 1992, s 59A(1) applies, and all references to ‘partner’ include reference to a member of a limited liability partnership to which TCGA 1992, s 59A(1) applies.

For the

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