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Where Taxpayers and Advisers Meet

SEISS Taxation

CG
Posts:199
Joined:Wed Aug 06, 2008 3:33 pm
SEISS Taxation

Postby CG » Fri Jan 14, 2022 2:53 pm

Hi

I have a client who is a partner in a partnership and is also self employed. His SEISS grant claims were therefore based on both his partnership and self employed profits for previous years.

He paid his SEISS grants into the partnership. If he were just in partnership these grants would become part of the income of the partnership, but as he is also self employed should he apportion part of the grants to the self employment pages and take out of partnership income?

Thank you for any advice on this.

robbob
Posts:3176
Joined:Wed Aug 06, 2008 4:01 pm

Re: SEISS Taxation

Postby robbob » Fri Jan 14, 2022 4:33 pm

How has the partnership treated the grants with regard to its calculation of profit split between partners ? have the grants been included or not?

I would be minded to default to funds going to to the individuals and not factored into the partnership accounts figures in any manner - then the grants being included in box 9.1 of the individuals partnership page therefore beinging the total income to be taxed from partnership as normal profits + grant in exactly the same manner as would be the case for a sole trader.

The danger here is if the partnership figures show these grants as income/profits of the partnership then obviously something will need to be done differently.

Unfortunately this post is estimated stuff from memory so dont preume my comments are to be trusted :)

CG
Posts:199
Joined:Wed Aug 06, 2008 3:33 pm

Re: SEISS Taxation

Postby CG » Fri Jan 14, 2022 4:46 pm

Thanks robbob

The Grants have been included as taxable income and therefore are in the partnerships profits, which are split 50/50 between the partners. The other partner's grants were treated the same (she doesn't have a self employed business).

The partnership is the bigger business and the grants were used to help its cashflow.

I read that if the grants were paid into the partnership business they should form part of the profits and not be reported on the individual tax returns.

Would HMRC expect to see part of the grant on the self employed pages? Or is it right to keep it all in the partnership where the grants were paid in?

robbob
Posts:3176
Joined:Wed Aug 06, 2008 4:01 pm

Re: SEISS Taxation

Postby robbob » Fri Jan 14, 2022 5:14 pm

my worry would be that hmrc are expecting these grants would show up on the individual return - i suspect the answer to your questions is probably somewhere within the any answers section of accounting web - unfortunately i dont know the answer - hmrc should be able to tell you the answer but not 100% convinced i would trust their answer if i did ask them.

robbob
Posts:3176
Joined:Wed Aug 06, 2008 4:01 pm

Re: SEISS Taxation

Postby robbob » Sat Jan 15, 2022 2:10 pm

i am guessing you have resolved your issue CG - just so happens i am doing partnership return today and i came across this which seems to answer your questions - add note to additional information box on perosnal tax return makes sense if income has been treated as income of the partnership.

https://www.litrg.org.uk/tax-guides/coronavirus-guidance/self-employment-income-support-scheme/SEISS-grants-tax-return

presuming treated as partnership taxable income
In these circumstances, the SEISS grants should not be included on the individual’s partnership supplementary pages (SA104S and SA104F) but instead should be included within the Turnover (sales) boxes 3.24 or 3.29 on the Partnership tax return (SA800).

She should not include any amounts in box 9.1 on her partnership return as the SEISS grants have already been included as taxable income. Ella may want to explain in the additional information ‘white space’ on her tax return that the partnership has distributed her SEISS grants within the partnership and it is included within her share of the profits from the partnership.

CG
Posts:199
Joined:Wed Aug 06, 2008 3:33 pm

Re: SEISS Taxation

Postby CG » Sat Jan 15, 2022 2:35 pm

Ahaha - thanks robbob - I read that very article with Ella's example!

I think I will do this, though I have the added hurdle of the self employment, but reading further down that same article it seems OK to allocate the grant to the business most affected.

Thanks for your help.


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