Partnership Cessation

1 Partner wants to leave partnership. How is best to process this?

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I have a 2 person partnership client. One partner would like to leave the business and I'm wondering how I do this?

The partnership has been trading since 2017. Their year end is 5th April.

The remaining partner would like to carry on the business and I need to know how to do this.

They are VAT registered and have a business government gateway account which is used to process the VAT returns.

They are also a regisered contractor and so use the CIS services on their government gateway account to verify subcontractors as well as submit CIS returns.

My questions are as follows;

1. Do they have to disolve the partnership and the remaining partner just trades under a sole tradership?

1a. If the Partnership is dissolved then does that mean that the business has completely ceased too, therefore the sole tradership will then need to re-register for VAT and for a Contractor CIS account.

2. The remaining partner wants to buy the leaving partner out of the business. Should this payment be made out of the business bank account or his own personal account?

3. The partner leaving wishes to keep a van paid for by the partnership but purchased in his own name. What happens here. Does he need to buy it from the business?

4. How do they inform HMRC of all of this?

HMRC website has nothing helpful about this and I've never dealt with this before.

 

 

 

 

 

 

Replies (2)

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RLI
By lionofludesch
17th Apr 2019 16:02

1. Yes
1a. Yes
2. Depends what he's buying - motor vehicles, goodwill, plant.
3. In essence, yes.
4. Mainly by filling forms in. VAT7, VAT1, maybe VAT 68, Self Assessment returns, etc etc.

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