Client is applying pressure for me to switch him from sole trader status into partnership with his wife (because his mates have done it!). Client is a consultant surgeon with private practice (sole trader). Wife is not medically trained at all and will do nothing whatsoever in any partnership that would be formed. This is clearly an attractive option because the wife has no income so a large portion of the current sole trader profits (about 43K) would be sheltered from the higher rate tax and some basic rate tax currently being charged on these profits to my client. Profits for this purpose are £175K.
I do not believe that the formation of such a partnership would be correct given the wifes status but I am struggling to defend it right now particular against the pub talk but I have come across this before where poor advice is seen as brilliant advice by clients where it saves them tax albeit they are an HMRC question away from trouble!
Any advice would be appreciate on this thank you