I have an LLP partnership with 2 partners. One partner is introducing £100,000 to basically fund the business.
To enable the other partner to be in business, he will be drawing out an amount each month. As the business is making no profits currently when drawing the amount out partner 2 (with no current account introductions) will go in to defecit.
So given that the partnership is making no profits, would the partner 2 extractions even have to go on the tax return or would it just be seen as a negative account on the balance sheet? I think it would not go on the tax return and it is just an issue between the partners.
Some figures for example. Partner 1 puts £100,000 in, Partner 2 nil. Profits in year nil. Partner 2 draws £24,000. So Partnership profits are nil. Partners accounts show partner 1 £100,000 in credit, partner 2 £24,000 in deficit.
Many thanks for assistance