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Where Taxpayers and Advisers Meet

Partnership tax return help needed

IGORT
Posts:4
Joined:Sat Nov 03, 2018 11:56 am
Partnership tax return help needed

Postby IGORT » Sun Nov 04, 2018 7:08 am

Tax

Hi everyone, I hope someone can help to this one.

I have two small businesses as self employed and on both I pay taxes through HMRC website myself every year. I don't have a problem with that as It seems pretty straightforward. Last year I've registered a partnership. The partnership includes me and my wife. She helping me a lot with administration side of it(invoicing, logging details and now even marketing as business grows). But she never had any share of profit (in real terms she had) but not as registered self employed Individual. Also it would be more tax efficient thing to do to spread a profit across two of us. The question is: I've registered a partnership on Nov 2017. How I suppose to fill tax return for the year 2017 / 18? Do I have to declare taxes from Apr 2017 to Oct 2017 separately from Nov 2017 to Apr 2018. Because partnership accounting began in the middle of tax year, how I suppose to split? New invoices to customers with partnership UTR also started on November 2017.
Any help or advice appreciated.
Thanks
Igor

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Partnership tax return help needed

Postby RMC » Sun Nov 04, 2018 8:03 pm

Simple:
On your personal tax return you should declare our self-employed businesses should declare profits up to the dates of cessation, if that took place.
Both you and your wife should also declare on the partnership pages of your personal tax returns your respective shares of partnership profit.

IGORT
Posts:4
Joined:Sat Nov 03, 2018 11:56 am

Re: Partnership tax return help needed

Postby IGORT » Sun Nov 04, 2018 11:22 pm

Thanks for swift response. Just want to get this clear. Date of cessation? You mean the date partnership was registered? So cessation of individual business account as such?
Thanks

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Partnership tax return help needed

Postby bd6759 » Mon Nov 05, 2018 10:16 pm

Perhaps the best question to ask you is why do you think that you are in a partnership? What have you done that has turned your business into a partnership?

IGORT
Posts:4
Joined:Sat Nov 03, 2018 11:56 am

Re: Partnership tax return help needed

Postby IGORT » Tue Nov 06, 2018 2:01 pm

Hi, initially it was only me who involved in this two business. Now the business has grown, my wife used to help me from time to time and gradually became my bookkeeper/administrator if you will. She spends time doing invoice marketing and other admin related activities. So that one thing. And another thing is to be more tax effecient. My wife will take her share of profit (she is unemployed) which means I'll have to pay less tax on my share. As I understand its perfectly reasonable and legal thing to do.
Thanks

RMC
Posts:435
Joined:Wed Aug 06, 2008 3:35 pm

Re: Partnership tax return help needed

Postby RMC » Wed Nov 07, 2018 11:40 pm

If one or both businesses were transferred to the partnership, then they would have ceased trading at the date it or they have done so. If you transferred only one business to the partnership and the other continues, then the first one ceased trading at the date it ceased trading, whilst the continuing business continues trading until such time it also ceases trading.
Various elections are available on transfer of a business to a partnership, but too boring for me to elaborate. Maybe some of colleagues will, so beware.

IGORT
Posts:4
Joined:Sat Nov 03, 2018 11:56 am

Re: Partnership tax return help needed

Postby IGORT » Thu Nov 08, 2018 10:27 am

Thanks for your response. Yes, both businesses transferred to partnership. The date partnership has started is 1st November 2017 so I presume its the date when two businesses ceased trading as I individual entities.
Many thanks


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