Hi,
I'm assisting my sister at the moment in relation to a dispute in her partnership.
My sister took leave of absence from the partnership between 2005 and 2008, during which time she did not receive any income.
She returned to work in 2008, on a part time basis, and since then has increased her workload and is now working full time.
The partnership provides services to Government agencies. Payments are made to individual parters, and pooled, as per the partnership agreement. Salaries are paid as agreed and net profits are divided equally between the partners.
When she returned to work in 2008, the other partners obtained verbal agreement from her that she would not be entitled to any part of the professional services withholding tax credit that arose from the payments made by the government agencies.
That agreement has remained intact until now, but my sister now wants to revisit it.
My understanding is that while a withholding tax can be apportioned between partners, this only applies if the associated fees are paid to the partnership and not to the individual partners.
Furthermore, if an apportionment of withholding tax is made that is not in line with how net profits are distributed within the partnership, this must be agreed with the RC, and each partner must sign an agreement to the effect that they agree to the allocation and that they will not seek credit on any other basis.
Payments from the government agencies have been made in the name of my sister, and she has official letters from the government agencies for each year detailing the withholding tax due to her personally, and has never signed anything to the effect that she agreed not to take her share of any available credit arising from withholding tax.
She is seeking legal advice, but my opinion is that she is entitled to submit revised self assessments for 2008-2013 in which she can claim credit for her withholding tax paid.
Am I incorrect in this?
I'm assisting my sister at the moment in relation to a dispute in her partnership.
My sister took leave of absence from the partnership between 2005 and 2008, during which time she did not receive any income.
She returned to work in 2008, on a part time basis, and since then has increased her workload and is now working full time.
The partnership provides services to Government agencies. Payments are made to individual parters, and pooled, as per the partnership agreement. Salaries are paid as agreed and net profits are divided equally between the partners.
When she returned to work in 2008, the other partners obtained verbal agreement from her that she would not be entitled to any part of the professional services withholding tax credit that arose from the payments made by the government agencies.
That agreement has remained intact until now, but my sister now wants to revisit it.
My understanding is that while a withholding tax can be apportioned between partners, this only applies if the associated fees are paid to the partnership and not to the individual partners.
Furthermore, if an apportionment of withholding tax is made that is not in line with how net profits are distributed within the partnership, this must be agreed with the RC, and each partner must sign an agreement to the effect that they agree to the allocation and that they will not seek credit on any other basis.
Payments from the government agencies have been made in the name of my sister, and she has official letters from the government agencies for each year detailing the withholding tax due to her personally, and has never signed anything to the effect that she agreed not to take her share of any available credit arising from withholding tax.
She is seeking legal advice, but my opinion is that she is entitled to submit revised self assessments for 2008-2013 in which she can claim credit for her withholding tax paid.
Am I incorrect in this?