Procorre - letters advising allocation of profits

[webberg]

We understand that a batch of such letters has been issued.

These say that the profits for 2014/15 have now been agreed and the profit allocation due is equal to the overdrawn current account.

The letters advise declaring the 2014/15 profit as part of your 2018/19 tax return.

Please be careful.

UK tax legislation on partnerships is not all it could be. Often you have to revert to a Statement of Practice (D12) in order to work out what to do.

However the general rule is that partnership profits are taxed in accordance with the allocation as determined by the partnership deed - in the year of assessment.

There is no provision to make adjustments to the taxable amount 3 or 4 years after the year end and no provision to tax partnership profits in a year in which you were not in the partnership. (There are provisions about post cessation receipts but again matching these to this situation is not easy).

We are therefore of the opinion that the action Procorre is suggesting as to declaration etc is inappropriate and not in line with legislation or practice.

Further, we are of the opinion that if Procorre are now suggesting this action and in effect saying that they operated a tax deferment structure, then we see no reason why it was not disclosable for DOTAS purposes. Given that they are offshore and most users were not, this may have meant that the users were liable to disclose. Non disclosure can bring penalties.

Please, if you have this sort of letter, discuss it with your advisers.

[Benson77]

procorre LLP profit distribution letter

HI, I received one of these letters but no mention of 2014/15. I was officially deregistered from procorre last year, am I going to receive one of these letters every year until the ODCA is cleared?

This letter amounts to an extra unforeseen 10k in tax that I was not prepared for in any way.

[NickLeeson2]

HI, I received one of these letters but no mention of 2014/15. I was officially deregistered from procorre last year, am I going to receive one of these letters every year until the ODCA is cleared?

This letter amounts to an extra unforeseen 10k in tax that I was not prepared for in any way.

Have you declared the overdrawn amount?

I asked Procorre how they came to these figures. They responded that due to me leaving and the company being under different ownership then they could not advise.

[Benson77]

No I haven't, I'm now seeking professional advice and waiting to hear back. I intend to declare the profit share as this will have been declared by Procorre (or should be). I know people have had issues with procorres UTR number but they have advised me that I should use my Ltd companies UTR on my SA.

[webberg]

No I haven't, I'm now seeking professional advice and waiting to hear back. I intend to declare the profit share as this will have been declared by Procorre (or should be). I know people have had issues with procorres UTR number but they have advised me that I should use my Ltd companies UTR on my SA.

Given that Procorre is not "registered" as a UK partnership I suggest that they may not have a UK UTR and therefore will NOT be declaring anything to HMRC.

A declaration in Singapore (or whatever jurisdiction is appropriate) is unlikely to find its way to HMRC.

My understanding is that Procorre ask partners to declare the partnership profit under their own, personal, UTR?

Do you not find that a little odd?

[Benson77]

Given that Procorre is not "registered" as a UK partnership I suggest that they may not have a UK UTR and therefore will NOT be declaring anything to HMRC.

A declaration in Singapore (or whatever jurisdiction is appropriate) is unlikely to find its way to HMRC.

My understanding is that Procorre ask partners to declare the partnership profit under their own, personal, UTR?

Do you not find that a little odd?

HI, yes that makes sense but what about PROCORRE (UK) LIMITED Company number 07644727, wont they make a tax return?

[webberg]

HI, yes that makes sense but what about PROCORRE (UK) LIMITED Company number 07644727, wont they make a tax return?

Possibly.

You were not part of Procorre (UK) Ltd though so what difference will that make?

I have no idea if the company is a member of the partnership or not. If it is then it would be obliged to report its own share of the profit, but not yours.

You really need to read all the papers you have carefully and think about what is said and also what is inferred but not said.

[Benson77]

Possibly.

You were not part of Procorre (UK) Ltd though so what difference will that make?

I have no idea if the company is a member of the partnership or not. If it is then it would be obliged to report its own share of the profit, but not yours.

You really need to read all the papers you have carefully and think about what is said and also what is inferred but not said.

I've read & reread but its all so vague I would need a degreee to understand it fully.
I have questioned procorre as to how this payment was actually made to me in the form of a profit share but they have had to escalate that question to someone else and I'm awaiting a reply.

What is the benefit to procorre in even giving out these letters if they are not declaring it in the UK?

I appreciate you taking the time to point out some of the issues, I wonder if anyone else has declared it or just left it to one side?

[Benson77]

Procorre have replied to me confirming that they will be declaring these profit shares in the UK.
They say the profit share is my allocation of profits made whilst on project for Procorre and the funds were received via my business development fund whilst on project and the process means I can now declare them on my self-assessment.

As much as I don't want that to be the case I'm finding it hard to see how they're wrong.

[Fred Bloggs]

Procorre have replied to me confirming that they will be declaring these profit shares in the UK.
They say the profit share is my allocation of profits made whilst on project for Procorre and the funds were received via my business development fund whilst on project and the process means I can now declare them on my self-assessment.

As much as I don't want that to be the case I'm finding it hard to see how they're wrong.

Kind of begs the question, what was the attraction that led you to engage with them in the first place? I have always wondered about this, since their website is a master piece of filling glossy web pages with impressive sounding words without actually telling me anything. I'm genuinely intrigued. Thanks