Andrew Penman answers a reader's query on tax on a retiring partner.
Q:A profitable partnership business has been operated by two individuals for a number of years. One partner has now left and emigrated. She was not interested in financial matters and only required a payment of £35 000 on leaving although her capital account showed a balance of about £300 000. The partnership balance sheet showed a substantial cash balance and some debtors and creditors. There was no partnership agreement although profits had been shared 60%/40%. The remaining partner is continuing the business as a sole trader. The capital account balance of £265 000 of the departing partner has been transferred to the capital account of the remaining partner. Apart from a PET for IHT purposes made by the departing partner are there any other taxation consequences from this unusual situation?
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Andrew Penman answers a reader's query on tax on a retiring partner.
Q:A profitable partnership business has been operated by two individuals for a number of years. One partner has now left and emigrated. She was not interested in financial matters and only required a payment of £35 000 on leaving although her capital account showed a balance of about £300 000. The partnership balance sheet showed a substantial cash balance and some debtors and creditors. There was no partnership agreement although profits had been shared 60%/40%. The remaining partner is continuing the business as a sole trader. The capital account balance of £265 000 of the departing partner has been transferred to the capital account of the remaining partner. Apart from a PET for IHT purposes made by the departing partner are there any other taxation consequences from this unusual situation?
...
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