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taxadvisor.uk, Chartered Certified Accountant
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There, This may be a bit long winded but here goes... Me

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Hi There,
This may be a bit long winded but here goes...
Me and a friend have started a General Partnership and have each done our self assessments and have our UTRs. We are developing an IPhone app. In order for us to progress further we need to sign up to an IOS Developer programme. You can either sign up for this as a company or as an individual person. They do not accept general partnerships as you need to supply a D.U.N.S Number along with company certificates etc. We are not really interested in becoming a limited company and as we are just a 'General' Partnership we will need to sign up as an individual person. This means that one of us will need to provide our individual name, individual address and an individual bank account for any money that is made from the application to be paid into. The seller name will be displayed as the individual persons name and not the Partnership name.
My question is that if we decide to do it this way and my partner is the individual person on the IOS Developer Programme, how do we legally split the money between us and pay tax on it? If we made £10,000 for example, is it just a case that my partner would transfer £5,000 into my bank account and £5,000 would remain in his account and we each declare an earning of £5,000 on our own tax return and each pay tax accordingly?
Thanks for you Help
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Please clarify for me... when you say "Me and a friend have started a General Partnership and have each done our self assessments and have our UTRs"

are you stating that you have not registered for self assessment as a partnership but as sole traders

Is the general partnership in spirit ... how do you split the income for joint ventures at present

Many thanks

Customer: replied 2 years ago.

We have registered the partnership.

We received a letter from HMRC saying that the partnership has been registered and then we both received individual letters saying that we have both been set up for individual self assessment and both have individual UTR numbers.

Customer: replied 2 years ago.

This is our first joint venture, we haven't made any money as a partnership yet and only recently have been registered. This is why we after some advice as to how any money we make is split between us and how we each pay tax on it. The fact that we need to sign up as one individual person on this IOS Developer programme has just made us wonder how we legally say that we both earned the money.

Expert:  taxadvisor.uk replied 2 years ago.
Kris, thanks for your reply.

Let me give you an example of an accountancy practise.. Not all partners may have the certificate to carry out statutory audits and/or insolvency work. The partner who has the appropriate qualifications would sign the report. The fee income goes into the practice pot for distribution etc.

Your alternative would be to keep this so called joint venture a single venture because of its requirements and constraints. If you wish to have your share of this income you both will have to trade as an individuals and then you charge the venture holder a fee for your support service.

This way it does not hit the partnership accounts and you both report this income on self employed sole trader basis.

I hope this is helpful
Customer: replied 2 years ago.

I'm really sorry, I don't understand.

I just want to know how me and my partner both take our earnings from money that we have earned as a partnership.

So, we are a General Partnership making an iphone game

We need to sign up to the 'Apple IOS developer programme' to make it available to be sold on ITunes and make money from it.

You can either sign up to the 'Apple IOS programme' as an individual person or as a company. Meaning that either you as an individual are selling the Iphone app or a company is selling the app.

We can't sign up to the 'Apple IOS developer programme' as a company as they do not accept General Partnerships.

So, if my partner signs up to it as an individual person and gives his name as the seller and gives a bank account to Apple. Any money that is made from sales will be paid into that bank account under his name as the seller.

We are both making this app and are both partners, it is just that he is listed as the seller.

My question is how do we share the money between us. If the iphone game makes £10,000 and we each wanted to earn £5,000 from it, how do we do that?

Expert:  taxadvisor.uk replied 2 years ago.
Kris, thanks for your reply...

I thought I had answered it in a previous posting as the alternative way ..

If you wish to have your share of £10k as an example, you could not simply ask your partner to give you a cheque and that is the end of it.

You both file self assessment returns and show two separate income source, one as partnership for all ventures taken and reported jointly and one as self employed where he would show his income as £10k and expenses as £5k giving him a profit of £5k.

You on the other hand would show an income of £5k and no expenses, giving you a profit of £5k.

I hope this is helpful.
Customer: replied 2 years ago.

Thanks for your reply, I am still slightly confused so please can you confirm the following:-

We both have PAYE jobs which would continue as normal. Would we show this on our self assessments as well as the earnings from the partnership?

Just to clarify, using the 10K as an example,

If my partner is shown as the 'Apple IOS seller' he would complete a self assessment showing earnings of £10,000 less expenses of £5,000. Those expenses would be paid to me and I would complete my self assessment showing that amount as earnings. Therefore we would both pay tax on our £5.000.

So do we complete one separate form declaring that the partnership has made £10,000 and both sign it?

My partner will then declare on his self assessment that he earned £10,000 with £5,000 of that being expenses. What would these expenses be shown as?

On my self assessment form I would show that I have earned £5,000 from the partnership.

We would then both be taxed on our £5,000.

Is this correct?

Thanks so much for your patience in this matter.

Expert:  taxadvisor.uk replied 2 years ago.
Kris, thank you for your reply...

You are nearly there but not quite...

You have aleardy stated that this project is not a partnership project because of contraints. Therefore, any income you get from this project is outside the scope of partnership activity albeit you both are working on this project.

You are effectively a subcontractor to your partner as he has to been seen to be working on this as an individual.

For this project only, you both report income from the project as income from self employment as sole traders.

Now we come to general partnership. I presume this is formed to carry out projects over and above this one. Until such time the general partnership earns any income you should file a nil self assessment return for the partnership.

When completing your personal self assessment returns, you as individuals would show income from
Employment as employees
Self employment as sole traders both reporting a profit of £5k.
No share of profit from partnership (as this is not a partnership project)

I hope this is clearer and helpful.
Customer: replied 2 years ago.

Ok that's great, I assume he would declare the expenses as 'Payment to subcontractor' (me).

Would you advise us to make a signed friends agreement stating that we both earn 50% of any profits made?

Expert:  taxadvisor.uk replied 2 years ago.
Kris, thanks for your reply.

Yes, he would declare this as payment to subcontactor.. When you file a short self employment return you don't have to show expenses by different expense headings but group them as one - total allowable expenses.

A agreement would be advisable to protect both friends.

I hope this is helpful and answers your question.


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Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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