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Partner leaving a two person partnership

As a result of divorce, H is buying out W's share of their partnership and will continue to trade.

As a result of divorce, a husband is buying out the wife's share of their partnership and will continue to trade as a sole trader. I expected there to be some sort of retirement agreement and that I would show the partner's retirement on the last partnership tax return (with the relevant profit split and no change of accounting date) then continue seemlessly with the self-employment pages the following year. The lawyers, however, have drafted a sale and purchase agreement with the partnership ceasing to trade (implying a  new trade starting for the self-employment). 

Am I out of touch or should I pursue the continuance approach rather than the cessation + new start with the lawyers?

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11th Dec 2018 17:21

Presumably the partnership's year end is not 5 April?

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By possep
11th Dec 2018 17:21

I think that his year end won't change but technically the partnership will cease and he will be a sole trader. I suggest partnership account are drawn up to cessation and sole trade accounts to the normal year end. His basis of assessment wont change but a white space note would be needed.

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11th Dec 2018 18:10

OP - the answer depends on the dates to which past accounts have been submitted and to which you intend to prepare future accounts.

The continuing partner will indeed continue seemlessly but, if you change the year end, there will be overlap relief issues.

It's completely different to the pre-SA rules.

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12th Dec 2018 10:10

The accounting date isn't changing - 31 October.

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12th Dec 2018 10:11

The accounting date isn't changing - 31 October.

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