Cessation of partnership

Cessation of partnership

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Partnership ceases half way through accounting period and is carried on by one of two partners as a sole trader.

How is this treated for self assessment tax. Does it require two sets of accounts? How will the Revenue know what has happened?
Andrew

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By epwallace
20th Dec 2004 12:22

Partnership cessation
Normally only one set of accounts will be necessary but you may require to submit two SAIs with the partnership return - eg the 12m in the year of cessation and also for the period to cessation. Partnership statements would record allocation of profits for all period(s) to cessation accordingly.
The partnership return will disclose the cessation date but this will also feed through to the individuals returns - i.e. the continuing party will have both partnership and self employed schedules to complete with profits as allocated per partnership statement with effective 100% allocation post partnership cessation.
Ewan

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By hallsi
20th Dec 2004 12:31

partnership converted to sole trader
This is not treated as a cessation of trade for the partnership. Instead you should enter all figures based on the full accounting period in the SA800 and make adjustments to the partners’ share of the profits to coincide with your calculations of the relevant profit due to the outgoing partner.

The outgoing partner claims overlap relief where applicable and the remaining partner continues in trade using the same basis period (unless there is also a change in accounting date). Although you complete the SA800 this year, you obviously complete the self employment pages from next year where the partnership is converted to a sole trader.

Use box 3.116 to indicate that the partnership is transferred to a sole trader.

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By User deleted
20th Dec 2004 13:24

Confirm Simon is correct
I found it in the Self Assessment Tax Return Guide when I had to do one last year.

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