My client was a husband and wife partnership, the wife died leaving partnership losses brought forward on her tax return.
I have looked at applying termination loss relief, but the partnership has made losses in the past, he position is as follows:
2010/11 -Loss £18,044
2011/12 - Loss £14,512
2012/13 - profit £18,729
Leaving losses b/fwd £13,827
The husband has other income for which these losses could be really useful to offset against.
Is there anything I can do? With hindsight I would have discussed changing the profit share with them.
Replies (7)
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Losses die with the wife
When did she die?
Her losses brought forward from 2012/13 will be available against her share of the profit, if any, for 2013/14, so you could amend the 2013/14 profit share to give her (up to) £6,914 (or £13,827 if your figures were for each partner), which would obviously save the husband some tax.
No carry forward
Yeah - she's not going to be carrying these forward, I'm afraid, so you need to allocate more losses to the husband.
Agreement?
Yeah - she's not going to be carrying these forward, I'm afraid, so you need to allocate more losses to the husband.
Always assuming that it's in the husband's interest to transfer assets into the wife's estate. Not a problem if they all come back to him as her beneficiary, but possibly a problem if her will sends them elsewhere.
@lion
How can losses be allocated to the husband as the 2012 return is out of time for amendment?
With difficulty
How can losses be allocated to the husband as the 2012 return is out of time for amendment?
I believe the proverbial boat may have been missed. Although the possibility of shunting more 2013 profit to be covered by the loss remains - for three weeks or so.
There's not enough information here. As hinted above by John, one of the key issues may well be what happens to her estate. It's not purely a tax issue.
Unfortunately, the OP is fire-fighting here.
What year ?
5th May ...... what year ?
If 2013, you're fine. You can split the profits how you want. The only thing you can't do is give one partner a profit and the other a loss.
I've only known HMRC challenge a profit split once - about 30 years ago - and the wet-behind-the-ears Inspector backed off on reply 1 because he'd got it very badly wrong.