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CIS Tax in a disolved partnership

I have done the accounts and personal tax returns for a partnership that traded for 11 months and then the two partners became sole traders for one month, one with the existing business. The partnership have CIS tax dedecuted from their income. I have allocated this 50/50 per their oringinal agreement and they are both due a refund. It as then come to my attention with the confirmation of dissolvement that the partner who has left has 'no financial involement, responsibility or authority' and that and outstanding monies owed to the partnership be the full responsibility of the partner that has continued with the business. Would this include the CIS tax? Both the refunds are arriving to the agents bank account.


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04th Feb 2013 12:01

Tax and refunds personal

The partnership doesn't pay tax and so doesn't benefit from refunds. The profits and and CIS are split as per the agreement and then included in the individuals' tax returns. The tax refunds should therefore each go to the individuals.

Consider a situation where the partners had liabilities from other income that outweighed the CIS refunds. Would you write to one advising him to pay over the CIS tax to the other?

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