Leaving a Partnership

Discussion in 'Legal' started by broonie30, Oct 18, 2008.

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  1. broonie30

    broonie30 UKBF Newcomer Free Member

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    Hello all,

    I'm just looking for any advice on what I all need to be doing since I am leaving a partnership. We have a partnership agreement in place which states either of us can leave and the remaining partner has the option to carry on the business. I have been made an offer for my half which I have accepted and am now looking into doing everything to remove any liability from myself.

    We are leasing a van which is registered to the partnership but with only my name and signature on the finance agreement. Is this easy enough to transfer over? If I was to write up a Disolving Partnership agreement and clearly state that all present and future costs and liabilities are the responsibility of the remaing partner, would this cover me legally?

    Any advice and pearls of wisdom are greatly welcome. Thanks.
     
    Posted: Oct 18, 2008 By: broonie30 Member since: Oct 18, 2008
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  2. Peter Cowling

    Peter Cowling UKBF Newcomer Free Member

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    Hi,

    What needs to be done, depends on what sort of partnership organisation is involved. It also depends on whether the split is amicable or not.

    Regardless of these points:

    Yes you do need to remove yourself from the partnership agreement, and make sure that the incoming partner is included in your place. I would ensure that this process is witnessed by an independent person, who signs to affirm their presence.

    Transfer of loan for the van is straightforward, but only if your partner (or the incoming partner) will take up the liability. If so, contact the company and explain that you are leaving and want to update the paperwork. Ask for confirmation from them once they receive an updated form. Two points to note here:

    1. If the partnership is a company registered with companies house, and your have the right to sign financial documents at the rate of the finance agreement, the company already has clear responsibility for the contract. I would update the signature, but you can be clear where the obligation lies already.
    2. If there is any problem in getting the contract re-signed, I would just terminate it.

    The bank account signatories, and related paperwork is important. I would make sure that this is all refreshed.

    Tax documents likewise.

    Any papers registered with companies house likewise again.

    Non-financial obligations can sometimes be overlooked. Website domain ownership, and other potential off-balance sheet assets warrant some consideration. As do, potentially, official or unofficial naming rights.

    Caveat: the above advice is not legal advice, and I am not a lawyer.
     
    Posted: Oct 18, 2008 By: Peter Cowling Member since: Oct 18, 2008
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  3. broonie30

    broonie30 UKBF Newcomer Free Member

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    Hi, thanks for your quick reply and advice.

    Just to clarify a couple of points. The partnership is not registered for VAT or with companies house. The split is amicable as it is not making enough to sustain 2 people.

    The plan is for myself to leave the partnership and my business partner to continue trading as a sole trader in the company name. He is to have sole responsibility for all profits and losses after I leave. I just wanted to ensure that I was covering all bases.

    I intend to inform HMRC that the partnership is changing to operating as a sole trader. While also informing them that I am no longer self employed.

    The bank account would also be changed so as to remove my name from it.

    A disolving partnership agreement would be drawn up releasing me from any future costs and liabilities incurred by the business. While also exempting me from any future profits.

    My main concern was transferring the finance agreement from my name to my business partner, even if the partnership was to end and business be continued as a sole trader.
    Hopefully this will prove to be straight forward enough and simply a case of updating details.

    Thanks again
     
    Posted: Oct 18, 2008 By: broonie30 Member since: Oct 18, 2008
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  4. Peter Cowling

    Peter Cowling UKBF Newcomer Free Member

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    Based on what you say, I think you are right to focus on the van contract.

    With things being amicable that really can make a lot of difference/save a lot of money.

    Good luck.
     
    Posted: Oct 18, 2008 By: Peter Cowling Member since: Oct 18, 2008
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