Partnership trade with investments becomes investment partnership
A trading partnership with some investment properties has traded for many years with year end 30 June. Prior to June 2008, there has not been formal separation of the large retail trade and the much smaller letting businesses. On 1 July 08 the retail trade element is put into a newly incorporated company to benefit from tax free draw down on loan accounts. The investment properties remain in the partnership. With no change, the partnership would have used year ended 30 June 08 as basis period for 2008-09 for combined profits. To catch up on arising basis for rental income, should rental profits be assessed for the 21 months from 1 July 07 to 5 April 09 using transitional overlap relief (from 1998 - new client, several changes of accountant since. Can HMRC supply overlap amount? and how on earth is that split between the 2 business elements?) And then there is a cessation of a partnership trade. So how should the 2 business elements be treated on the change for tax purposes? Thoughts on tax implications much appreciated.
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