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Partnership assets

Partnership assets

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Providing the Partnership Agreement specifies the owners of a particular partnership asset is there a problem if :
i) the specified partners are the owners of a said partnership asset to the exclusion of other partners
ii) and those specified partners share in the proceeds of any sale of that asset in an agreed ratio which is different from the other capital sharing ratios?
Simon Goodrich

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By AnonymousUser
17th Jun 2009 22:35

No problem
As far as I am aware there should be no problem with this provided that it is all set out clearly in the partnership agreement and this is supported by the extract from HMRC manuals which I have copied below. I have certainly come across these sort of arrangements in the past and dealt with the disposals in accordance with the beneficial ownership proportions.

It would probably be helpful for the partnership accounts every year to include a special note about the beneficial ownership of the partnership assets where this differs from the profit sharing ratio. That way it should not come as a surprise to HMRC or to other partners on the disposals.

This is from CG27120: If you are dealing with a case where actual consideration has passed, then you work out the partner's fractional share by using one of four tests:

* is there any specific written agreement which sets out how you allocate capital assets? If there is, you follow that.
* is there any written agreement which sets out how capital profits will be shared or any evidence which shows you how they are shared? If there is, you follow that.
* is there any written agreement which sets out how income profits will be shared or any evidence which shows you how they are shared? If there is, you follow that
* if you cannot find any written agreement or any evidence for any of the above, you follow the rules in Section 24(1) Partnership Act 1890: then you treat the assets as being held equally by all the partners.

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