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taxadvisor.uk, Chartered Certified Accountant
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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Good afternoon, I was in a self employed partnership from April

Resolved Question:

Good afternoon, I was in a self employed partnership from April 2012 but I left the partnership on 6th September 2012. I did not complete my self assessment on line in time by Jan 2014 for the tax period April 2012 - 5th April 2013 as I thought I didn't have to. Ive since paid the £100 fine and I am completing the self assessment online before 1st May deadline.

During my time within the partnership from 6th April to 6th Sept - I did not take any income, but the income and expenditure report (6th April - 6th Sept) created by an accountant for the other business partner shows a net profit of £3686. Therefore, the Inland Revenue are trying to initially ask me to pay £737.60

However, should I have to pay any income tax if I didn't take any income and the profit remained in the business account which I no longer have access to?

Also, if I have to pay tax even though I received no income, wouldn't the tax amount based on the net profit be split 50/50 as per the partnership agreement, so at worst I should be paying £368.80

I have been told by my previous business partner that the company paid its taxes based on the tax year 2012-2013

Regards

Graham
Submitted: 3 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 3 years ago.
Hello and welcome to the site. Thank you for your question.

The partnership should have file a separate partnership return SA800 showing the financial results of the business and also showing details of each partner.

Each partner will need a copy of their allocation of income to fill in their personal tax return. Your tax liability will be based on your share of the profit from the business and not what income was derived by the partnership.

If the partnership has settled the taxes for tax year 2012-13 and the partnership ceased in that tax year, you should appeal against thetax payable in 2013-14 (based on 2012-13 tax). You can do that by completing form SA303 - Claim to reduce payments on account.

I hope this is helpful and answers your question.


If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 3 years ago.

Hi Thanks


 


The partnership has since gone from a parternship (after I left the company) into a LTD company and they have paid their taxes, Im not due to pay tax for 2013-14 so I wont need to complete the SA303 form.


 


Am I completing the correct form using HMRC online as it as asking me for the total income, and expenses for the business top calculate the net profit rather than asking me if I took any income from the business during the time frame mentioned.


 


I have noted on the online application that the books were done until 6th September when I left.


 


Please can you confirm which form I need to complete before 1st May which is just for my income (which was none) rather than the partnership details.


 


Hope this makes sense


 


Graham


 


 

Expert:  taxadvisor.uk replied 3 years ago.
Graham, thank you for your reply.

You need to complete SA104S - Partnership (short).

I hope this is helpful and answers your question. I
Customer: replied 3 years ago.

Thanks


 


One final thing just to clarify before I go.


 


You mentioned:


Your tax liability will be based on your share of the profit from the business and not what income was derived by the partnership.


 


Does this mean I would have to pay income tax on my share of the net business profit which was £3686 or because I personally didn't receive any of this money, I would not have to pay tax on this amount.


 


This is the main thing I need clarification on before I continue with my online submission on HMRC gateway.


 


Thanks


 

Expert:  taxadvisor.uk replied 3 years ago.
.Graham,thank you for your reply.

You have to pay tax on your share of the profit whether you withdrew any money or not.. I presume you had other income in the tax year to cover your personal allowance. Otherwise, your tax liability will be based on net income from all sources less personal allowance.

I hope this is helpful and answers your question.
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