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Professional break-up

13 January 2015
Issue: 4484 / Categories: Forum & Feedback , Business , Partnerships

Court-determined revised profit share and damages

Two surveyors formed a partnership in 2002 and we have acted on their behalf and have prepared accounts for the past 12 years. After the partnership broke up in December 2012 one partner claimed  he should have received a larger share of the net profit.

The partner we act for lost the court case and must pay £34 000 compensation to the retiring partner for his inadequate profit share from 2002. I produced the annual figures analysing this.

The total amount awarded by the court was £50 000 so I presume there is an additional £16 000 of damages to be paid to the retiring partner. In addition my client has had to pay £13 000 for his own legal fees and £12 000 towards his ex-partner’s costs.

What are the tax implications of these transactions? Can I amend the tax computations for the past 12 years?...

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