Two couples own FHL - split of profit

Can one person take all of the profit?

Didn't find your answer?

Two x H&W couples jointly own an FHL, can the profits be allocated to just one of the four people (as FHL doesn't require the automatic 50:50 H&W split so does it follow that it doesn't require amongst two different couples, as it's treated as if it's a partnership therefore it should just be inline with the agreed share?) Or does it need to be split in terms of legal ownership between each couple, then the couples are fine to allocate their share between them as they please per exception D of S836.

Thanks in advance at this busy time of year!

Replies (4)

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By 356B
23rd Jan 2020 19:26

Surely the "agreed share" is at the discretion of the partners? So they can change it.

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Replying to 356B:
By Justin Bryant
24th Jan 2020 10:07

But they're pretty unlikely to be proper general partners of a GP (as opposed to joint owners), so s809AZA ITA 2007 is likely to catch this.

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By practice for sale
27th Jan 2020 10:19

I would have thought you had 2 different things to consider here.

1) ownership of the land, and profits arising therefrom ('rent'), which would follow legal ownership

2) running a business out of that property, and allocating the profit accordingly. has it been registered as a partnership? Is there a partnership return? if so I would have thought that the profits could be allocated in accordance with the wishes of the partners. Who runs the business? If it is only one person, then that person could register to be running the FHL in their own sole name, although that then begs the question should they be paying rent to the owners of the property.

My understanding is that although there were rumblings a few years ago about trying to force partnership sharing to reflect commercial activity that never happened, so the most flexible structure would be a partnership.

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By johnjenkins
27th Jan 2020 10:37

The easiest way, if only one is looking after the property, is to give that person an amount for their services. If it equals the profit then so be it.

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