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Readers’ forum: Making tax digital

21 September 2021
Issue: 4809 / Categories: Forum & Feedback
Using the making tax digital exemption for income for partnerships.

Like many advisers I am concerned that some of my smaller clients will not be ready for making tax digital and I would like to defer their entry into the system for as long as possible.

I see that there is an exemption from making tax digital for income for partnerships with a corporate member. Could some of my sole trader clients take advantage of this by forming a company with themselves as sole shareholder and then carry on the business as a partnership between themselves as a new company?

A very small profit share could if necessary be allocated to the company – although under the hybrid rules this would probably be taxed on the individual.

Is this idea worth pursuing or is it a case of solving one problem only to create many more in its place?

What do readers think?

Query 19 813...

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