Partnerships with company members

Partnerships with company members

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What exactly does this mean? Is this is terms of accounting periods and therefore the individuals in the partnership are taxed on profits per accounting period and not basis periods? How does it work in practise? Is this then applied to the individual partners too? Does this mean that salaries are shown as deductible in applying corporation tax principles, but shown as profit share for a partner? Confused!!

This is new to me...... so I am prepared for some howlers if necessary!
HD

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By acountancy.lindsayandco.n
22nd Feb 2007 16:54

partnership with corporate members
I have not done one of these for years, but as I remember its not that difficult. Firstly we just compute the taxable profit according to basic principles bearing in mind that capital allowances are now just treated as a business expense (there may still be a differences when there are farming allowances). If we take a simple case with an accounting date of say 30 June 2006, for the individuals, their taxable shares are just whatever proportion has been agreed and they are assessed for the tax year 2006/07 on these. Assuming the company has an accounting date also of 30 June 2006, its share of the partnership profits will be liable to CT for that year together with any other income that arises to it. If its accounting date was not 30 June, you would have to apportion the income from the partnership in the normal way over the company's accounting periods. Hope this helps.

David

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