INTM610290 | Making Adjustments on the Tax Return: Members of a partnership required to make adjustments under the Profit Fragmentation legislation

Adjustments required on the Partnership Return (SA800)

If paragraph 7 of the Profit Fragmentation legislation requires adjustments relating to the income or expenses of a member of a partnership, adjustments must be first be made on the Partnership Return (form SA800).

• If the required adjustment consists of reducing an expense, disallow the relevant expense that was previously included in the return by making the appropriate entry in one of boxes 3.30-3.45.

• If the required adjustment consist of an increase in income, increase the income figure by inserting the additional income figure in box 3.67.

• The adjustments will be carried through to that member’s allocation of profits and losses shown on the partnership statements prepared by the partnership as part of the partnership return.

Adjustments required by partners

The relevant partnership members must reflect the adjustments to the profit/loss shown on the partnership statement in their own returns. Therefore for partnership members who are individuals, the figure at box 8 (on form SA104F and SA104S) must be adjusted to reflect the change to their share of the partnership profit or loss as a result of the adjustments required under paragraph 7 of the Profit Fragmentation legislation. Corporate partners must make the necessary adjustment in their CT computation.