Investment Partnerships with non-UK resident members
Investment partnerships with overseas investors (or strictly, ‘members’) could face difficulties if the investors prefer not to obtain the Unique Tax Reference numbers (UTR) required before the partnership return can be filed. An alternative process has been introduced to avoid the UK members becoming liable for the late filing penalties that would ensue.
Earlier this year HMRC made it compulsory for UK partnership tax returns to contain UTRs for each and every member. The British Venture Capital Association (BVCA) has since raised a number of issues with HMRC concerning the impact of this change for non-UK resident investors in Investment Partnerships. The BVCA identified a number of scenarios where overseas investors would be unwilling to obtain UTRs and identified the impact this would have on all members of the partnership.
HMRC have accepted the BVCA’s arguments and have introduced an alternative process for non-UK resident investors in Investment Partnerships. The use of this process is optional and involves HMRC creating a UTR for each overseas investor through the Central Agent Authorisation Team (CAAT) in Longbenton. They will do this from details of the investors provided by the partnership in advance of filing.
This will enable HMRC to collate information on all of this investor’s UK source income and gains from whatsoever source. If an investment partnership has any members falling within this process the partnership return must be submitted to the Large and Complex Partnership Unit in Birmingham.
It is expected that this process will remain in place for the tax years ending 5 April 2009 and 5 April 2010 after which time the process will be subject to review.