Can anyone tell me if there are any particular rules to follow or forms to fill in to dissolve a partnership please?
This current partnership is 2 brothers. There is no formal partnership agreement. The decision to dissolve the partnership is mutual and there is no profit to be taken/shared.
1 of the brothers is wanting to keep and run the business as a sole trader. Will he have to change the name of the business? Does he only need to inform HMRC of the new structure? (If so is this just on his next tax return, write a letter or is there a form to complete?)
If there was no formal partnership agreement then there's nothing particular needed to dissolve it. The best course of action would be for the two partners to write a statement demonstrating exactly who gets what, as of what date, that the retiring partner is or is not liable for future debts or has claim to future earnings from existing business/clients etc so that everyone knows where they stand. Both partners sign and get a copy.
He doesn't have to change the name of the business unless the retiring partner has an issue with it carrying on as it is, in which case they would have to come to some agreement.
The retiring partner can contact HMRC if he is no longer being self employed in any capacity as he will need to cancel his Class 2 NI payments. With regards to tax the cessation date will be entered onto the next tax returns due for both the partnership and the retiring partner.
Hope this helps.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
