going from partnership to sole trader

mamamoi

I have tried asking HMRC this question, but cannot find a definate answer either via the website or through their advisors on the phone.

If I want to cease a partnership and just file individual self assessments what do I have to do?

My husband and I for the past few years have had a small sideline business offering counselling and hypnotherpary etc. I have previously filled in self assessements indivdually for us both and done a partnership return using andica software. My husband has not seen any clients for 2 years due to work commitments and does not plan to in the near future. I would like to avoid all the hassle and cost of the andica partnership software and just file a SA for myself and a nil return SA for my husband. Can I just put on the SA that I was not in a partnership or do I still have to do the andica thing and put an official date of when the partnership ceased?

Hope someone can help? I always get stressed out at SA time of year and get myself into a tizzz about it for a few extra quid that I earn and just want it to be straightforward

Savvy_Sue

Did you get legal advice when you set the partnership up? Do you have a partnership agreement? (Surely you do?) What does that say about dissolving the partnership?

mamamoi

Hi sue, no we didnt do anything official or get adviceor agreements. It is simply a sidline business where i see a few clients for hypnotherapy sessions on an adhoc basis with very little money involved.

Just thinking of doing away with.partnership to save filing the sa800 as my husband no longer sees any clients or takes any share of the profits.

Savvy_Sue

I don't know, and I'm hoping someone will pop up who does know, but I suspect HMRC are not answering your question because a partnership is a legal entity (not quite as formal as a Ltd Co) and how you dissolve it is nothing to do with them.

IF I'm right, then a letter to them stating that the partnership was dissolved on DATE should do the trick, but send it recorded ... and (obviously) keep a copy.

Your partner should continue to do a return, however, until told he doesn't need to.

Pennywise

The partnership will continue to exist until you formally end it and tell all interested parties that it has ended, i.e. HMRC, the bank, loan/HP/lease firms, suppliers, etc - basically anyone who the p/ship may owe money to or anyone who may have a claim against you both as partners arising from whilst it was a partnership.

You will have to do a final partnership self assessment tax return up to the termination date - then you complete the boxes on the p/s tax return for final accounting period end and tick a box to say the trade/partnership has ceased.

By telling HMRC separately as well as putting the termination details on the final p/s tax return, they should update their records and stop asking for p/s returns in future.

antrobus

mamamoi wrote: »

Hi sue, no we didnt do anything official or get adviceor agreements. It is simply a sidline business where i see a few clients for hypnotherapy sessions on an adhoc basis with very little money involved.

Just thinking of doing away with.partnership to save filing the sa800 as my husband no longer sees any clients or takes any share of the profits.

Where a partnership ceases to trade, including where there is a sole trader to partnership or partnership to sole trader change during the return year, the partnership return should show the date of cessation or change (commencement or cessation).

http://www.hmrc.gov.uk/manuals/sammanual/sam122210.htm

If there is no partnership agreement then s32 Partnership Act 1890 applies; "a partnership is dissolved...by any partner giving notice to the other or others of his intention to dissolve the partnership".

So all you have to do is (a) tell your husband, and (b) tell HMRC by filling in the correct box on your next SA800.

mamamoi

Many thanks for your helpful replies. Guess i have to do the sa800 one last time then!