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The tentacles of IR35

10 October 2001
Issue: 3828 / Categories:
A partnership comprised two sets of husbands and wives. Each partner owns 25 per cent of a property, part of which is let to third parties and part to a trading company operating as printers owned by the partners. Administration services and the services of three of the partners to operate the printing business are invoiced by the partnership to the company. Two of the partners are directors in the company and receive a salary for that office holding. Cars are provided through the partnership with a private use adjustment.

Is IR35 relevant in this situation because under section 4(1)(b) of Schedule 12 to the Finance Act 2000 most of the profits of the partnership derive from the administration and operational services provided by the partnership to their own printing company as a single client?

Would readers recommend any alternative planning? There was mention from the client of incorporating the partnership business but it is probably not a good idea to put the property in a company if a measure of business asset taper relief will be available to the partners if they were to sell the property in the future.

(Query T15 889) – Man of Surrey.



A partnership may permit partial diversion of rent from husbands to wives by means of commission for property administration. Dividends cannot be diverted for tax purposes.

Presumably the partner...

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