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Healthy expense claims
Key points
- HMRC’s guidance on partnership expenses has changed twice recently.
- The taxable profits of the partnership trade must be determined before profits are allocated between the partners.
- The profits of a trade must be calculated in accordance with generally accepted accounting practice.
- But unincorporated partnerships are not required to prepare and file full GAAP-compliant accounts.
- Focusing rigidly on assets and liabilities of the partnership will not always be appropriate.
- Some doubts remain over the interpretation of HMRC’s guidance.
According to the Partnership Act 1890 s 1 a partnership is ‘the relation which subsists between persons carrying on a business in common with a view of profit’. It is not a separate entity in its own right and it is entirely to be expected that the ‘persons’ carrying on the business might incur expenditure personally for the purposes of that business.
For many years a widely accepted approach has been in place to allow...
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