Partnerships Flashcards

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1
Q

What legislation are partnerships governed by ?

A

The partnership act 1890

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2
Q

What decisions must be unanimous in a partnership ?

A
  • Changing the nature of the business
  • Introducing a new partner
  • changing terms of partnership agreement
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3
Q

What is the order of payment when a partnership is sold ?

A

Creditors - partners who lent money - partners who paid their share of partnership capital - surplus shared between partners

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4
Q

What are partners responsibilities under PA 1890 ?

A
  • Not compete with the firm
  • Account to firm for any private profits made without other partners consent
  • Bear share of any loss made by business
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5
Q

When is a firm liable to third parties even if didn’t consent to contract ?

A

Apparent authority - for actions not authorised but:
A) Transaction related to business of kind by firm
B) Partners would usually be expected to have authority
C) Other party didn’t know they didn’t have authority
D) Other party deals with person they believe to be a partner

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6
Q

What must a partner do to escape future liabilities when leaving partnership

A

Give actual notice to anyone firm has had previous dealings with and place a notice in London gazette to notify future dealings of the partners leave.

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7
Q

What debts are the partners liable for ?

A

Any debts incurred whilst a partner

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8
Q

How are the partners liable in a partnership ?

A

Jointly and severally liable - one can be sued for all and recover

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9
Q

How does a partner leave an LLP?

A

By giving reasonable notice and notify companies house with TM01

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10
Q

What is deductible expenditure ?

A

Expenditure of an income nature and wholly and exclusively for the purpose of trade

+ (plant and machinery)

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11
Q

What is the business annual investment allowance ?

A

First £1M of fresh qualifying expenditure on plant and machinery in accounting period is wholly deductible

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12
Q

How is trading profits calculated ?

A

(Chargeable receipts - deductible expenses) - capital allowances = trading profits

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13
Q

What are chargeable receipts?

A

Money received from sale of goods and services.

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14
Q

What are the three categories of income under income tax ?

A

Non savings non dividend (NSND)

Savings income

Dividend income

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15
Q

How is income tax payable calculated ?

A

Total income - allowable reliefs = net income

Net income - personal allowances = taxable income

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16
Q

How much is the personal allowance ?

A

£12,570

17
Q

What are the allowable reliefs under income tax ?

A

Loan to buy share in partnership

Loan to invest in close trading company

Loan to PRs to pay inheritance tax

18
Q

When is a partnership created ?

A

Where two or more people carry on a business in common with a view of profit

19
Q

Is there a duty to work full time in a partnership ?

A

In general no however if they all bring a special skill and conduct implies it then it may be so