Question: I act for a husband and wife partnership which carries on a textile trading business. The business has grown over the last few years and now generates annual profits of approximately £400 000. Up until now the partners have drawn out all taxed profits. However they are concerned that some of these profits should be held back for future reinvestment into the partnership. They do not see however why they should be paying 50% tax on monies that are reinvested into the business. I would like to suggest the introduction of a corporate partner to help reduce their income tax liability but would welcome your thoughts of the wider implications. It is envisaged that shares in the corporate partner will be held jointly by husband and wife.
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