Setting up a partnership 10 months after starting it

[tonylondon703]

Hello all. I appreciate any advice that can be given on my situation.

In July last year I started my online business. In around October, I registered as a sole trader.

My wife helps me out with this business quite a lot, but for whatever reason I never set up a partnership (or even thought about it). I just assumed there might be some way I could pay her a wage.

It turns out that a partnership might be the best way to go in terms of splitting the profits and saving tax.

If I set up a partnership now, can I state that it began in July 2017? Would HMRC allow this or wold they look at it suspiciously?

My wife hasn't registered as as self-employed yet either. Is also possible for her to register now and state that she began as self-employed in July 2017?

I got a bit lazy with organising my tax affairs and of course wish I'd done all this earlier. Just wondering what can be done from here so that my wife can receive money for the 2017-2018 year.

Thanks in advance.

 

[The Byre]

Partnership law is somewhat different to other company laws, in that a partnership is established as soon as a joint commercial venture takes place.

For example, five goofy guys play together as a rock band. No contract, no oral agreement, other than to agree to split the gig money five equal ways, has taken place. They are in a business partnership, a fact that has far-reaching legal implications, especially when one partner decides to leave and therefore dissolves the entire partnership (see the story of The Small Faces, The Rolling Stones and countless other bands).

So you and your wife are jointly engaged in a commercial venture and therefore already in a business partnership and whether she declares her income or not, is her affair.

There are so many aspects to this situation and what you do from here on in is very much dependent on the levels of income you can expect to achieve and several other factors, such as other sources of income, nature of expenditure, I could go on!

The usual golden answer is 'Talk to an accountant!'

The UK has the most complex tax laws on Planet Earth (with the US a close second!) so trying to structure your affairs on a DIY basis is madness! Talk to an accountant!

 

[Scalloway]

Your wife has until 5 October to register as self employed. You also need to register the partnership with HMRC.

 

[tonylondon703]

Thank you for the replies. I'll speak to an accountant about this. It's good to know that I still have time to sort this out.