Partnerships - mileage?

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Paddy199

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Hi,

Can anyone please clarify if partners in a partnership can claim travel expenses using the mileage basis? My opinion is that they are treated as self employed and can only claim receipted expenses but I am finding it very difficult getting a straight answer from Revenue.

Does it matter if you are salaried partner?

Thanks for any help.
 
I'd say it definitely matters if you're a salaried partner - ie not an equity partner, and taxed/insurable as an employee. SP-IT/2/07 only applies to employees & office holders, so presumably there's no question of it applying to a self-employed individual / partner, unless by concession, which you'd have to doubt would be forthcoming (floodgates).

(Edited to include: ) Conversely if the salaried partner is an employee and entitled to tax free T&S you can be pretty sure they'll look closely at the arrangement due to risk of wage substitution.
 
It would depend on what you mean by salaried, my view of salaried is where there is a disproportionate contribution of labour between the partners and one is rewarded before the other.

They are still partners and can only claim expenses on an incurred basis not mileage in my view
 
Joe_90 said:
It would depend on what you mean by salaried, my view of salaried is where there is a disproportionate contribution of labour between the partners and one is rewarded before the other.

They are still partners and can only claim expenses on an incurred basis not mileage in my view
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Hi joe,

I think in this context he may mean a junior partner, often in a professional services firm, who is held out as a partner, but is in fact an employee and paid/taxed accordingly. They have no equity interest in the partnership.
 
The more I think about this, and the way partnership figures are arrived at i.e. in adding back salary etc to get the partners 'trade' profit or loss, I believe strongly that mileage is never appropriate in partnership cases.

I will ask Revenue again but the first reply was completely useless.
 
FYI - Revenue have just replied and confirmed that partners if salaried can claim mileage.
 
A partner who is taxed under self assessment. If they take a salary, they can claim mileage.
 
Paddy199 said:
A partner who is taxed under self assessment. If they take a salary, they can claim mileage.
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An equity partner can't take a salary. Any salary is added back in arriving at taxable profit. Each partner is then taxed on their portion of the profits, under Sch D Case I/II as if it were a separate trade.

Mileage expenses are allowed as a deduction from Schedule E emoluments. There's no such corresponding provision for Sch D. That is why a sole-trader cannot claim mileage expenses and consequently a partner in a partnership connot either.

I suspect there's some confusion over the term "salaried partner".
 
Paddy199 said:
A partner who is taxed under self assessment. If they take a salary, they can claim mileage.
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smeharg said:
An equity partner can't take a salary. Any salary is added back in arriving at taxable profit. Each partner is then taxed on their portion of the profits, under Sch D Case I/II as if it were a separate trade.

Mileage expenses are allowed as a deduction from Schedule E emoluments. There's no such corresponding provision for Sch D. That is why a sole-trader cannot claim mileage expenses and consequently a partner in a partnership connot either.

I suspect there's some confusion over the term "salaried partner".
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Couldn't agree more strongly with SMeharg, there's simply no basis for a deduction for any payments to a Schedule D partner - it's no different than a sole trader, they can draw money from the business calling it whatever name they like but at the end of the day it's not an expense of the trade/profession.

@Paddy199 - I'd strongly advise an expression of doubt if you're going to act/file on the basis of the most recent letter.
 
Response from Revenue attached which I will be ignoring.

Hello
If the partners are salaried they can claim civil service mileage rates. Otherwise it's just normal car allowances.

Regards
Kildare IT
 
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