Used Andica for partnership return last year no problem, all three partners made a profit.
This year partnership made a loss, shared by the partners 1 making a profit the other 2 losses.
When I fill in the forms and go to submit I am told the boxes 11, 12 for the partners and the partnership do not agree. They do agree. Have tried adding zeros to profits where there is a loss, etc but still get the same answer.
I am the agent, a private bookkeeper.
Have asked andica for help and am awaiting a reply.
Can anyone here suggest an answer?
tthink I've found the solution! According to the help pages profit can only be recorded on the andica form with those partners that showed a profit and likewise losses only with those who have a loss, therefore the overall loss is shared equally with the 2 partners who have a loss and the whole thing is explained in the additional notes.
Seems very complicated and completedly inaccurate, hope they go back to making a profit next year.
Any comments would be appreciated.
-- Edited by Daisy on Tuesday 15th of January 2013 04:41:08 PM
Thanks but it is how the Inland Revenue does it, it is not Andica. If 1 partner has a profit and the others a loss and overall there is a loss it is shared proportionately between those with a loss the 1 with a profit has 0 profit. Had never had a partnership with a loss before. It is good for the 1 in profit but the others get less of the actual loss that they made, therefore paying more tax and overall the Inland Revenue benefits.
Have your clients considered incorporation as an option?
With a company each director is judged separately where partners are jointly and severally liable for each others losses.
Hell would freeze over before I would consider being in a partnership and I find it strange that others still opt for that business form when there are so many better ones (including LLP's (although be careful going down that path as liquidations still revert to joint and several)).
If you are in a position to advise your client to consider other business forms it may be worth mentioning.
If you are not then get the client to speak to their accountants about better business forms for them.
If not addressed and one partner makes future losses then I guarantee that no matter how friendly they may be now there will be a serious falling out between these partners.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Thanks Shaun, I will look into it for the future, but this particular partnership are a weekend entertainment and all have well paid employment elsewhere. The most one will have to repay is £30. But why do the Inland Revenue do this? Apart from getting more tax, it is inaccurate accounting. Daisy
Its one of those things that it doesn't matter the size of the business, the partners have entered into a business arrangement where they are jointly and severally liable for losses.
The idea is not HMRC's but rather the principle upon which partnerships are based taken from the partnership act (which does have provision for overriding the standard terms). HMRC are merely applying the rules (correctly) to the tax system.
One way to get around this without starting a company would be for them to both be self employed individually and then cross charge for their time for services rendered. In that way the losses would lie with the individuals rather than the partnership which is looked at as a whole rather than simply the sum of the individuals within it.
Of course, going down that route you are getting into the whole area of who invoices who? is one of them a deemed employee of the other? who owns the equipment?
Personally, if it was a viable business rather than a hobby business I would always tend to advise incorporation over partnership.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
