A married couple whom own 3 FHL properties , all on the same site, wish to register a partnership, which would include a trade which is currently undertaken by the wife as a sole trader and the 3 FHL properties which are currently included on their personal tax returns as jointly owned property on the land and property supplementary pages.
Currently there is a loss brought forward from earlier years for the FHL properties which is unlikely to be fully utilised in the current tax year (2019/20).
This leaves the question as to whether the losses they currently both hold as individuals would be lost if they moved to the partnership status for the new tax year (2020/21).
If the FHL business was such that it qualified as trading (it does not) there would be no cessation and the partnership would be viewed as a continuation of the sole trade business and the losses from sole trade could be set against each partners share of the partnership profits.
FHL businesses are referred to as a deemed 'trade' and I am wondering if the same would be true for these losses - in that this would be the same 'trade' continuing (albeit in partnership) with the existing losses being available to carry forward against future profits from the FHL.
For the avoidance of doubt I am aware that the income and expenditure for the FHLs would be dealt with in the land and property sections of the partnership tax return and would be separate to the trading income of the partnership.
I hope the above makes sense - trying to keep it concise - and would be most welcoming of any pointers from someone whom might have dealt with a similar situation.
Have a lovely Friday!