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Readers Forum: Parting ways

10 March 2020
Issue: 4735 / Categories: Forum & Feedback
Availability of averaging to a farming partnership.

I have a client that is a husband and wife farm partnership and 2018-19 is the first year for their partnership. Before this my clients were trading as a four-partner partnership but due to circumstances they have decided to cease the original partnership and continue their trade as two separate entities.

What I would like to know is whether two or five-year averaging is available to the partners in the final year of the old four-partner partnership? I am aware that averaging is not available in the year of starting the trade (or joining a partnership) or in the year of cessation of trade (or leaving a partnership). However it is clear that the farming trade has continued just within a different legal partnership. My client is farming on part of the same farmland and farming in the same nature as the previous partnership.


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