I have a client a partnership of two. They have set up a very high tec dental practince in 2003/4 and substantial FYA's are available. One partner can claim all his share at 40% due to other income whilst the other will generate a loss with the loss of the 22%/nil rate band etc. Is there some way I can make a split the capital allowances claim between them?
Richard Shaul
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No, but...
Capital allowances have to be deducted to arrive at the Sch D profit, before allocation and are therefore effectively split in accordance with the profit-sharing ratio of the accounts. However, surely it should be fairly easy to partly achieve the desired result be giving one partner a prior profit share (bearing in mind that where there is an overall loss, as appears to be indicated in the question, no partner can end up with a taxable profit). Allowances etc may still be wasted, but at least partner A would be able to fully utilise the loss.
Then again, question does not provide details of prior years' income - carry-back of losses in early years? This may be preferable to my 'solution' above, which may result in an undesired inequality of capital.