Shared Foster Care - Partnership?

Shared Foster Care - Partnership?

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We have a husband and wife client that receive a small amount of assessable income from the foster care of three children.

They are both registered foster carers and the income is paid to both of them jointly.

Below is an extract of the guidelines written by HMRC

"People cared for are placed with individuals, not with partnerships.

However, we accept that a partnership can carry on a business of providing

qualifying care. Where this is the case, a Partnership Tax Return should be

completed on the basis that the qualifying amount relates to the partnership

rather than to the individuals involved in the partnership."

We are unclear as to whether we should complete a Partnership Tax Return, or whether the income should be halved and treated as two separate self employments?

Thanks

Replies (3)

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By Jekyll and Hyde
06th Sep 2011 16:08

We do a partnership tax return

One of my clients are joint foster carers and I have nearly always submitted a partnership tax return and 2 individual tax returns. In the first year (about 2001) I completed 2 individual tax returns but no partnership tax return. Our clients were issued with a penalty for not filing the return (subsequently reversed) and I queried this again with HMRC in about 2003 and they did not have a problem with me continuing to complete a partnership tax return. The partnership's sole source of income is that of forster caring and I also tick box 3.10 and include an additional note each year about foster carer exemptions. Based on my past experiences of HMRC I have always played safe and completed a partnership tax return.

One further point for you, you have noted that there is only a small amount of assessable income? From my experience most foster carers will only have 1 or 2 children at a time. Based on the £10,000 exemption rules (plus £200/£250 per child per week) I would imagine that this assessable income would fall below such an taxable amount and therefore could be deemed to be at a nil profit/nil loss tax point.

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By Hanleymail
06th Sep 2011 17:47

Thanks
They have three but only a small figure assessable.

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By Jon Spe-De
31st Dec 2018 13:31

Just to add an update to this advice based on 2018 experience...

I've been setting myself and my wife up as a partnership foster carers. After problems I called HMRC and they advised the partnership would not work and that the correct way is to file both individual returns and split the income. It's been a pain to backtrack this so I wanted to save others the hassle!

All the best

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