Advice on treatment of Capital introduced to Partnership on Sale of Business

[kookachoo]

Hi All

I was in a Partnership with my parents for a Guest House business that we purchased for £300k, and sold for £400k. However in the 6 years we owned it; we had at times had to introduce personal funds into the business account amounting to £10,000 over the period - which was always recorded as Capital introduced.

Rightly or wrongly I assumed that upon the sale this would be treated as a capital introduction and we could deduct this from the profit made on the sale, thereby reducing the gain subject to CGT from £100k to £90k.

My partnership accountant advises this is not the case, and we could only recoup the £10k introduced from the bank account if the funds allow - which they don't.

I've asked my LtdCo Contractor Accountant but they don't offer advice on Partnerships.

Can anyone help with any views or pointers? Thanks in advance!

[Jessica@WhiteFieldTax]

Your partnership accountant is correct.

Sorry to be the bearer of bad news.

[Maslins]

What Jessica said.

The property was bought for £300k, sold for £400k. The capital gain is simply based on that...only possible change being if you spent significant money improving it during that time (which wasn't claimed as a repair type expense).

Independently of that, there's the trade of the business. It may well be that you had to subsidise this with some of your own money when times weren't great. This would mean the trading profit of the business would have presumably been modest (or possibly a loss), so negligible tax to pay there...but this doesn't change the fact the property increased in value over that time period.

[kookachoo]

Thanks both for your replies! I'll suck it up!