I wondered if anyone could please offer their wisdom, as I think I may be overthinking this one.
I have a client who took over his father's business when he died. His father was a sole trader and the business is now a partnership. However, there was an outstanding debt to a supplier when his father died. The client would like to pay this debt, as the supplier is also a family friend. Can he pay this debt through the partnership bank account, or personally and claim it back, or was it his father's debt and no longer an allowable expense.
I'd be inclined to think of it like this. The outstanding debt to his supplier was part of the father's estate position at date of death. The related expenditure will form part of the profit/loss calculation to date of death. The executor(s) of the estate should sort all of this. I'd expect all the father's creditors at date of death to be paid out of the estate. Nothing to do with the son (your client).
Perhaps there's a reckoning to be made of the value of the business taken over by the partnership and to be included in the estate, if so, the partnership would have taken on the assets and liabilities and would continue to collect and pay them. There would be no question of allowable expense in the hands of the partnership. The expense went through the accounts of the deceased.
Thanks for your response. I was thinking the same myself, but wanted to confirm there was no way around it, as the estate as such was left to his mum, who has no way of dealing with it. I'm not even sure that final accounts were completed for the sole trader, as he was not my client.
