Capital gains for partnerships has a very limited amount of legislation. The area has been covered by a Statement of Practice (SP D12), issued by the then Commissioners of Inland Revenue following discussions with the Law Society and the Allied Accountancy Bodies in January 1975. In discussions with businesses and their advisers, the OTS found the statement was understood by large firms and most advisers, although smaller unrepresented firms and even some practitioners were not aware of the statement or its implications. Almost inevitably, the statement included references which had become out of date, and the writing style needed to benefit from more modern practices.
In our Review of Partnerships Interim and Final Reports, published January 2014 and January 2015 respectively, the OTS recommended keeping SP D12 largely intact rather than introducing a legislative version. However, the OTS was clear that the statement needed refining in some areas and updating into a more modern style with links to examples and further information within the HMRC guidance.
A sub-group of OTS stakeholders have continued to advise HMRC on the areas that needed updating, and the revised statement has now been published by HMRC. A number of stakeholders involved in the review of SP D12 commented they found the revised statement to be a considerable improvement over the original version.
The OTS is publicising this relaunch of SP D12 in order to raise awareness of the statement and the fact that it has been updated. As noted, smaller partnerships and some advisers need to be aware that this is the place to determine, for example, how partnership goodwill is subject to tax, together with the capital gains reliefs that may be claimable. HMRC endorse the need for reminding people on this and other partnership capital gains matters.