Partnership merger

Partnership merger

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We have two partnerships, with separate VAT registrations. Due to movements of partners, both will shortly have the same partners and therefore, for VAT purposes would presumably need to fall under the one single VAT registration. There is no prospect of bringing in a new partner to either of the two partnerships, and incorporation is not an option at the moment. Both partnerships hold assets against which input VAT has been claimed, one is registered under the flat rate scheme, and one under standard VAT accounting. The trades are very similar, and the trading period year ends are the same (5 April).

The partners wish to operate as one partnership rather than have two partnerships, with both sets of figures appearing on a single VAT return. The position would be further complicated as one of the VAT registrations is flat rate and one is not.

Our queries are as follows:

(1) We presume that our understanding of the VAT position is correct and there cannot be two separately registered partnerships with identical partners?

(2) If (1) is correct, then can we simply transfer the assets of one partnership into another without an adverse VAT affect (under TOGC or similar)? Preference is to transfer the assets held in the flat rate registered partnership and to close that registration.

(3) If we do (2), presumably we then simply deregister the partnership that has had its assets transferred?

(4) Upon deregistration of this partnership, would we then need to account for stocks and assets on the VAT 7 or simply enter as nil due?

(5) For capital allowances purposes, is there a provision to transfer at WDV so that we can avoid any balancing charges on the transfer of the trade/assets?

(6) Are there any other considerations that respondents can think of that we would need to be aware of?

We are grateful for any helpful replies or advice that members can offer. Many Thanks in advance.

Replies (2)

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By Portia Nina Levin
23rd Oct 2014 16:47

On 1

If one of them were an LLP or both were LLPs, you can have separate VAT registrations, because an LLP is a body corporate for VAT purposes.

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Replying to Lammy:
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By gimmeaccweb
03rd Nov 2014 12:17

Thank you Portia, particularly as yours was the only reply to my post. It is very much appreciated.

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