Closing down a partnership

fcjf

A former business partnership between myself and my wife, a hair salon, closed down at the end of April 2016 when the landlord of the premises terminated the lease for development purposes. My wife ran the business and she received 100% of the profits. In the 2016-17 tax year the salon operated for 3 weeks at the end of which we had to pay out £9,000 in redundancy payment. Along with other payments required in closing down the business the partnership accounts show a loss of £11,000. My wife has subsequently moved on to being a sole trader hairdresser working from home. Within her sole trader accounts my wife has made a net profit of £15,000 for 2016-17. Can 100% of the losses from the partnership be offset against the sole trader profits? Alternatively, I have a salary of £64,000 from my work, even though I didn’t receive any profits from the business in previous years, can I use any of the losses from the partnership to offset my PAYE tax?

A further income we have is through a number of BTL’s we own. For 2016-17 my Wife’s profits from BTLs was £15,000 and mine £8,000. Can this profit be added to my Wife’s total taxable income as the starting point to offset the £11,000 loss? Alternatively can I use a proportion of the losses to offset tax?

As a further question, the partnership received £16,000 from the landlord as statutory compensation for termination of the lease, I have read that this is dealt with a capital not income so presumably this gets added to the balance sheet? When the partnership is closed down how is the balance sheet dealt with for taxation – CGT?

00ec25

and the partnership accountant advises what?

fcjf

Nothing, I haven't handed over the books to him yet.

I'm just trying to gain some knowledge from the forum to check/challenge his view.

bowlhead99

fcjf wrote: »

00ec25 wrote: »

and the partnership accountant advises what?

Nothing, I haven't handed over the books to him yet.

I'm just trying to gain some knowledge from the forum to check/challenge his view.

So, you don't know tax law or accountancy rules - and are willing to pay somebody who does, to take care of it for you - but first you want us to give you a comprehensive education in tax law and accounting, with particular attention to the specifics of your wife's situation, for free, so that you can challenge the view of the person whom you're paying for the expert advice.

That seems ambitous.

Why not get his view / his advice/ the work done, first... and then if you suspect it is inadequate - come back here and ask if people disagree with the advice which was given to you by the professional.

fcjf

So, you don't know tax law or accountancy rules - and are willing to pay somebody who does, to take care of it for you - but first you want us to give you a comprehensive education in tax law and accounting, with particular attention to the specifics of your wife's situation, for free, so that you can challenge the view of the person whom you're paying for the expert advice.

That seems ambitous.

Why not get his view / his advice/ the work done, first... and then if you suspect it is inadequate - come back here and ask if people disagree with the advice which was given to you by the professional.

I don't think I was asking for a comprehensive education in tax law and accounting but I get your point. As it happens our accountant is currently not able to work and won't be back working until November so I was trying to get some advice to help me understand the tax situation to ensure we have sufficient funds to cover our tax liabilities.

I'll be back in November then!