TaxTreatmentof a Partnership Voluntary Arrangement?

TaxTreatmentof a Partnership Voluntary...

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I've done a search on here and can't see this being asked before. A question was asked about a Corporate VA in 2010 but no replies. I've also searched the HMRC site but haven't uncovered the answer.

So ... if a partnership racks up trading losses in the 2012/13 tax year, then enters into a Partnership Voluntary Arrangement in June 2013, how is the write off in trade creditors treated for income tax and Class 4 NIC purposes please?

Can the 2013 loss still be carried back to an earlier year?

Is the write of in trade creditor value a taxable 'receipt'?

Also how is the write off treated for VAT purposes please?

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By johngroganjga
16th Aug 2013 09:39

If the write-back of creditors was not taxable the partners would be claiming tax relief on expenditure they had not paid and were never going to pay.  Likewise if the write back were ignored for VAT purposes the partnership would be recovering input tax they had not suffered and were never going to suffer.

So what logic dictates is fairly obvious.  Tax is not necessarily logical but as far as I am aware in this type of situation the tax treatment will follow the accounting treatment.

I can't see why entering into a VA in June 2013 would restrict the ability to use a 2012/2013 loss.  

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