If you have a partership of say three partners, they all agree on costs for the business etc and profits are shares equally. One partner however works from home a lot and also uses family members to assist him, but the other partners do not agree on these costs being paid by the partnership. Is that partner able to employ them direct (outside of the pship) or make any further adjustments on his return for working from home allowance etc.?
Related resources
Replies (9)
Please login or register to join the discussion.
there is nowhere else on a tax return to adjust for additional expenses in a partnership, it should all be dealt with through the partnership accounts & the reflected in the share of the profit.
These expenses should be accounted for as partnership expenses and allocated to the calculation of partnership shares.
Broadly, the partner expenses are added back to the bottom line profit, the adjusted profit split equitably on whatever agreed basis, then the individual partners' expenses allocated to each partner to arrive at their final share.
He really needs his fellow partners to permit the costs within the partnership accounts.
They may be persuaded if he agrees that his profit allocation gets reduced by the cost, so if normally 90 profit, 30 each, and these costs are 10 reducing pship profit to 80 then others still get their 30 and he gets 20.
Unless the family members are doing extra work that benefits all partners that the other partners are not currently doing and it is just making the partner in question life easier why would they allow it ? .
Problem is that the partnership, all three, become liable to tax should those expenses be challenged.
Is the client looking to pretend that his family are self-employed in their own right? Cos they are not employed.
I would be with the other partners
Problem is that the partnership, all three, become liable to tax should those expenses be challenged.
I disagree.
The partners decide how the profits - or revised profits - are allocated, not HMRC.
-1.
Since the adjustment would not affect actual profits (nor how they were shared), I agree with Paul.
-1.
Since the adjustment would not affect actual profits (nor how they were shared), I agree with Paul.
Eh?
How can you agree with Paul when he says there would be additional tax and you say there isn't any?
