SolvedCH84741 | Penalties for Inaccuracies: Other penalty issues: Partnership penalties: Example of calculating potential lost revenue for partnerships
From HM Revenue & Customs · Compliance Handbook
You must check the date from which these rules apply for the tax or duty you are dealing with. See CH81011 for full details.
Example
A partnership submits an SA return for the year 2010-11 reflecting profits of £50,000.
The profits are shared by the partners on the following basis
| Partner A | £20,000 |
| Partner B | £20,000 |
| Partner C | £10,000 |
Following an enquiry into the return the profits are increased by £10,000 and the revised profits of £60,000 are shared as follows.
| Partner A | £24,000 |
| Partner B | £24,000 |
| Partner C | £12,000 |
Each partner is due to pay income tax at 22% and Class 4 NIC at 8% on their additional share of the profits.
For the purpose of calculating the penalty due from each partner, the potential lost revenue (PLR) is as follows.
| Partner A | £24,000 - £20,000 = £4,000 x 30% = £1,200 |
| Partner B | £24,000 - £20,000 = £4,000 x 30% = £1,200 |
| Partner C | £12,000 - £10,000 = £2,000 x 30% = £600 |
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)