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B7.406 Calculation of partnership gains

The legislation in respect of capital gains of partnerships is very limited, essentially TCGA 1992, ss 59, 59A and any of the general capital gains tax rules, when applied to transactions in partnership assets, can give rise to difficulties and anomalies. Therefore HMRC published SP D12 governing the treatment of partnership gains¹. Although the statements of practice and other forms of HMRC guidance do not have the force of law, they are generally to the benefit of the taxpayer and are almost universally followed; as a result there is no case law on the interpretation of TCGA 1992, s 59.

These rules state that where two or more persons carry on a trade or business in partnership any chargeable gains on the disposal of partnership assets are treated as disposals by the individual partners of their fractional interest in the partnership assets². The fractional share is determined by any specific agreement between the partners on how the surplus or loss on the disposal of a capital asset is to be allocated