Rebasing: example 4: FA 2008 rules: change in partnership sharing ratios on or after 6 April 2008 - FA 2008 rebasing rules
A and B formed a partnership on 1 January 1980 sharing assets on a 50%:50% basis.
The partnership acquired an asset for use in its business on 1 March 1980 for £100,000.
The market value of the asset on 31 March 1982 was £120,000.
Throughout the period the asset was included in the partnership balance sheet at its original cost of £100,000.
1) On 1 June 2008 C was admitted as a partner and the sharing ratios were changed to A 25%:B 50%:C 25%.
No payment was made by Partner C to Partner A in consideration for the transfer of a 25% interest in the partnership asset.
2) The partnership disposed of the asset on 1 September 2009 for £660,000.
1) Change in partnership sharing ratios on 1 June 2008
Partner A has disposed of a 25% interest in the asset to Partner C.
In accordance with paragraph 4 of SP D12 the disposal consideration will be treated as 25% of the current balance sheet value of the asset, £100,000 x 25% = £25,000.
SP1/89 and the practice outlined in CG28140 in relation to disposal on or after 6 April 2008 do not apply because the transfer is not one which results in neither a gain nor a loss.
Partner A’s CG computation for 2008/09 - FA 2008 rebasing rules
Less mv 31.03.82
|£120,000 x 25%||£25,000|
CG base costs for Partners A and B - FA 2008 rebasing rules
|Partner A||£120,000 x 50% = £60,000 - £30,000 = £30,000|
|Partner B||£120,000 x 50% = £60,000|
Partner C’s acquisition cost
Partner C will be treated as having acquired his 25% interest in the partnership asset for £25,000 on 1 June 2008, ie a sum equal to the disposal consideration taken into account for Partner A.
2) Disposal of the asset on 1 September 2009 for £660,000
In accordance with paragraph 2 of SP D12 the disposal consideration will be apportioned by reference to the partners’ sharing ratios.
|Partner A||£660,000 x 25% = £165,000|
|Partner B||£660,000 x 50% = £330,000|
|Partner C||£660,000 x 25% = £165,000|
CG computations for 2009/10
Less mv 31.03.82