Company partners

Company partners

Didn't find your answer?

A client (2-partner firm of architects) is thinking of replacing the partners (Mr A and Mr B) with their own Ltd Cos (Mr A Ltd and Mr B Ltd). There are no IR35 implications.

I am having a mental block with this. What happens re capital allowances - they can't be claimed by the partnrship now so are they claimed by the Ltd Cos in some way? If so, what happens with the cars? We want to avoid any BIK implications but don't want to lose CAs. Help!
Chris Martin

Replies (1)

Please login or register to join the discussion.

avatar
By rmason
14th Mar 2003 19:43

Tax planning a la Manuel?
Que, Mister Fawlty?

I may have had a long day and be tired, but is this an incorporation about to go horribly wrong?

If the partnership remains, but the old partners retire and new ones are admitted (which sort of seems what is proposed), then the effect is that the profits in future are calculated on CT principles and allocated out. This can play havoc with accounting, if the corporate partners and partnership do not draw up accounts to the same reference date. Don't forget that CT has no "basis period" equivalent.

Haven't looked at the SP on gains, but that could be a problem with transfers of goodwill between connected persons, although some holdover may be available to mitigate this.

Are you sure that the real aim isn't to go for a ltd co business, and have Mr A and Mr B as shareholders. There's no need for A Ltd and B Ltd as far as i can tell, and if you did add that to A&B Ltd, you'd have three active co's for marginal rate for starters.

As far as cars re concerned, surely you can incorporate, but take the cars out the day before via the capital accounts, and then run them outside the company claiming AMR's at 40p/25p.

"Numbers" will need to be done and all aspects checked.

Thanks (0)