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TonyTax
TonyTax, Tax Consultant
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My wife and i leased a property and ran a business as a partnership

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my wife and i leased a property and ran a business as a partnership from it. The business ceased day to day trading Dec 2013 (13/14). We re assigned the lease in August 2014 (10 yr lease with about 9 years remaining).
As a short lease I need to treat the premium received as income or the majority of it.
Do i declare this income on our self assessments directly or does it have to appear on a final return 14/15 for the business first.
Can I offset costs of re assignment e,g solrs fees, agents fees and the rent paid in the interim while we sought an assignee
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

Can you confirm that you paid a premium for the 10 year lease please and you received a premium from the assignee please. How long did the business run for? Did the assignee take over the monthly rental payment?
Customer: replied 1 year ago.

Hi

no we did not pay a premium, but did receive one and yes the assignee took over the rent payments

The business ran for 3.5 years and prior to signing the lease we had the property on a licence to occupy basis

thanks

Brian

Expert:  TonyTax replied 1 year ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 1 year ago.

grand!

Expert:  TonyTax replied 1 year ago.

Hi again.

If you ran the business as a partnership, you and your wife were each effectively self-employed. The lease would have been in your and your wife's names personally. Assuming that you showed the business ceased in your 2013/14 partnership and personal tax returns and you have submitted those to HMRC, you may as well leave those as they are.

I would disclose the assignment premium in your 2015 tax returns but not as partnership income as that ceased in 2013/14. It should be disclosed as personal income/gain. The income element should be shown in the SA105 rental pages (page UKP2). See PIM1205, BIM46255 and BIM46265. Any gain element should be disclosed in the CG108 pages.

You can claim the costs of assignment that you mention but not the rent you paid. Had the business still been in operation, you would have claimed it in your business accounts.

I hope this helps but let me know if you have any further questions.

Customer: replied 1 year ago.

thanks this is helpful. As regards ***** ***** which ceased trading we submitted accounts for it 13/14 and also a final Vat return. Do I have to do anything else to formally inform HMRC that we have not traded in this tax year 14/15 and that the partnership is finished?

regards

Brian

Expert:  TonyTax replied 1 year ago.
The SA105 property pages are here.

Information on calculating the gain is here and here.

As long as you put a date of cessation in the appropriate boxes of the partnership and personal tax returns, you need not do anything else. You should have informed the VAT part of HMRC of the cessation as well.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15882
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Hi Tony

thanks for this. one small question, I am not sure that the cessation date was entered on the returns as mentioned. How can I check this and if not how do I sort it out with HMRC....phone their helpline?

thanks

Brian

Expert:  TonyTax replied 1 year ago.
You could amend the returns online as you have until 31 January 2016 to do that with a 2014 tax return or phone the tax office on the number here and they will do it for you.
Customer: replied 1 year ago.

Many thanks, ***** ***** very helpful

regards

Brian

Expert:  TonyTax replied 1 year ago.
Thanks and good luck.

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