salaried partner

purdyoaten

I would love to help further but I have never used the software!

billozz

so can some one explain to me ( simply please never done this before) how we fill in the partners bits of the partnership form and then our individual ones. it seems our accountant has decided to retire and has dropped us right in it as we only have a couple of weeks to get it done. for instance the individual form asks for turnover and expenses but do we each enter the actual company turnover and expenses or our share of it. how do we show the 3rd partners expenses or do we just lump all the expenses together, sorry to be such a pain but iam under a bit of pressure incidentally have tried ringing hmrc but its just a joke waited 55 mins the 1st time i rang.
thanks again
Bill

zygurat789

I hope you have been in partnership for the whole of the tax year.
The partnership return covers the accounts of the busioness and finishes with the net profit split between the partners.
The partnership pages in the individual tax return starts of with share of profit.
I don't thin k you can submit a partnership tax return on HMRC site but I may be wrong.

purdyoaten

zygurat789 wrote: »

I hope you have been in partnership for the whole of the tax year.
The partnership return covers the accounts of the busioness and finishes with the net profit split between the partners.
The partnership pages in the individual tax return starts of with share of profit.
I don't thin k you can submit a partnership tax return on HMRC site but I may be wrong.

You are correct - one needs specialist software.

purdyoaten

billozz wrote: »

so can some one explain to me ( simply please never done this before) how we fill in the partners bits of the partnership form and then our individual ones. it seems our accountant has decided to retire and has dropped us right in it as we only have a couple of weeks to get it done. for instance the individual form asks for turnover and expenses but do we each enter the actual company turnover and expenses or our share of it. how do we show the 3rd partners expenses or do we just lump all the expenses together, sorry to be such a pain but iam under a bit of pressure incidentally have tried ringing hmrc but its just a joke waited 55 mins the 1st time i rang.
thanks again
Bill

On the partnership return one declares the turnover and expenses to arrive at the net profit as normal. After add backs and capital allowances deductions we have the taxable profit.

Let's say this is 100000 and the partnership is split £20000 to the salaried partner and the balance split equally. We have then A-£40000, B- £40000 and C - £20000. This share would be entered on the partnership section of the individual return. Please do not deduct the partner's salary as an expense! If your accounts are NOT made up to the end of the tax year or all three partners were not in the business for the complete tax year different calculations apply.

Your problem is that you need to buy specialist software to file the partnership return which has its own fines. You also need to be certain of what you are doing and you appear to be lacking some fairly basic knowledge- each partner is jointly liable for accuracy.
Even at this stage, if the accounts are completed, I would seek help. I should also advise that you absolutely need a copy of last year's tax computations which were prepared by your retiring accountant.
Partnership taxation is not for the novice!

billozz

thanks for the replies we have downloaded the software we need to complete the partnership return online

purdyoaten,
so we enter the salary of the partner and then split the balance between the two actual partners? do we do the same with the expenses?
cant thank you enough

purdyoaten

I presume that the expenses have been claimed on the profit and loss account - they should be.
You can allocate the profit any way that you like. To ensure that each partner benefits from their expenses we could have:

Profit £100k. Add expenses claimed in accounts. Allocate this figure (the profit to be divided) in the partnership sharing ratio. From EACH partner's total deduct their share of those expenses to arrive at their taxable share. The sum should total £100k.

You need to determine if the amount attributable to the salaried partner is before or after expenses.
You could provide figures and I, or someone else, can assist.

zygurat789

purdyoaten wrote: »

I presume that the expenses have been claimed on the profit and loss account - they should be.
You can allocate the profit any way that you like. To ensure that each partner benefits from their expenses we could have:

Profit £100k. Add expenses claimed in accounts. Allocate this figure (the profit to be divided) in the partnership sharing ratio. From EACH partner's total deduct their share of those expenses to arrive at their taxable share. The sum should total £100k.

You need to determine if the amount attributable to the salaried partner is before or after expenses.
You could provide figures and I, or someone else, can assist.

The partnership return shows a net profit and how it has been allocated. The mechanics of why it has been so allocated are not required just so long as the total profit allocated to the partners is the same as the allocatable profits.
Have you been a partnership for the whole year from 6/4/13?

purdyoaten

zygurat789 wrote: »

The partnership return shows a net profit and how it has been allocated. The mechanics of why it has been so allocated are not required just so long as the total profit allocated to the partners is the same as the allocatable profits.
Have you been a partnership for the whole year from 6/4/13?

Yes, although the poster is asking how to account for the third partner's expenses when allocating the profit - at least I think he is!

I sincerely hope that these expenses have been included in the P + L.

You final comment is very pertinent. I would want to know when the third partner joined also given the query about only his expenses.

zygurat789

purdyoaten wrote: »

Yes, although the poster is asking how to account for the third partner's expenses when allocating the profit - at least I think he is!

I sincerely hope that these expenses have been included in the P + L.

You final comment is very pertinent. I would want to know when the third partner joined also given the query about only his expenses.

i'm not sure what he is trying to achieve. What are the salaried partner's expenses? If they are normal business expenses they shoukld have been charged to P & L and that's the end of the story.
I think he sounds as if he is still trying to complete the sole trader pages.