Cessation of partnership

Cessation of partnership

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Partnership (2 partners) ceases.
Year end 7.5.04 forms basis of 04/05.
Cessation is 28.7.05.
Do I.........
1. Do I do a long set of partnership accounts to the date of cessation, deduct overlap relief and hence that is 05/06 partnership income?

2. Both partners then did sole trades - one for 2 months and one ongoing.
With the ongoing sole trade should i do accounts from cessation of partnership to 5.4.06 to get sole trade income for 05/06?
Ron

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By andymeeson
14th Sep 2005 09:51

To confirm re dates...
(1) For 05/06 the only available option is a long account from 8/5/04 to 28/7/05 deducting overlap profits (if you drew up a one year account ending on 7/5/05, the assessment for 05/06 would still need to include the period to 28/7/05 and the overlap).

(2) For sole trades, the first year's assessment is profits from commencement to 5 April 2006. However, you don't necessarily need to draw up accounts to 5 April - apportioning a longer account is perfectly acceptable: e.g. 8 months out of a year to 31/7/06.

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By AnonymousUser
13th Sep 2005 21:04

Accounts to Ceasation
You'll need to prepare the Partnerships Ceasation accounts and also prepare the Final Partnership Tax Return. The overlap profit for the Partnership will be deducted from the individuals personal Tax Returns. Each former partner will then, if carrying on in trade, prepare their own trading accounts from date of ceasation for the year and then apportion profits to 5th April 2006.

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