partnership lossses

Question 1

intro

Answer 1

treat as sole trader loss for each partners share of the loss

Question 2

available reliefs

Answer 2

s.64 - CY PY
s.71 - against cap gains in same year after s.64
s.83 - c/fwd against future profits from partnership
s.72 - new partner c/back against 1st 4 years of trade
s.89 - retiring partner terminal loss relief c/back against last 4 years

Question 3

notional losses

Answer 3

no relief from HMRC as profit has been made by the partnership as a whole

Question 4

notional loss distribution

Answer 4

partner c makes a loss

partner a / (partner a + partner b) * (partner c)
partner b / (partner a + partner b) * (partner c)

partner c = nil

Question 5

loss restriction - all partners

Answer 5

restriction applies to sideways loss relief - s.64 (CYPY) & s.72 (opening years)

higher of:
£50k or
25% of adjusted net income

restricts the amount of loss than can be relieved against non-trading income

no restriction against losses of the same trade

remaining loss can be carried forward under s.83

Question 6

non-active partners loss relief