17. Income tax: sole traders and partnerships

This chapter considers the taxation of income earned from a trade or profession. It covers the basic system of taxation; taxable profits for business; the basis of assessment; losses under the income tax system; and income tax liability of partnerships.

3. Liability of partners to outsiders

Partners will incur debts and other obligations in the course of carrying on the partnership’s business. This chapter examines the nature of the partners’ liabilities in these circumstances and the extent to which an individual partner can bind the partnership as a whole. It then considers whether it is possible for individuals who are not partners at the time the debt or obligation was incurred to be liable for that debt or obligation.

26. Liabilities arising from insolvency

This chapter considers the rules that enable insolvency practitioners to claim assets which are not held by the insolvent company itself. It discusses wrongful trading; transactions at an undervalue and preferences; transactions defrauding creditors; and invalid floating charges.

5. Termination of and retirement from a partnership

An individual may cease to be a partner on the happening of one of the following events: the dissolution of the partnership; his retirement; or his expulsion from the partnership. If the partnership is dissolved, the partnership will come to an end and its assets and business will be dealt with accordingly. The situation is different on the retirement or expulsion of a partner. Here, the former partners can carry on the business, albeit through the medium of a newly constituted partnership. This chapter considers the legal consequences of the occurrence of these events.

14. The articles of a private company

This chapter considers some of the major issues which the articles of association of a private company are likely to address and the way in which the articles of a company can be altered and any restrictions thereto. It covers provisions concerning shares and membership; provisions concerning meetings of shareholders; provisions concerning directors; single member companies; and alteration of articles.

16. Public companies

This chapter first discusses the distinguishing features of a public company. It then considers the advantages and disadvantages of obtaining a listing with the United Kingdom Listing Authority (UKLA) and the requirements for seeking and maintaining that listing.

25. Company insolvency proceedings

This chapter deals with the procedures available when a company is insolvent or facing financial difficulties. It also considers the ways in which insolvent partnerships can be subject to the same procedures as companies. The law relating to these matters is principally contained in the Insolvency Act 1986 together with the Insolvency Rules 1986, as amended by the Insolvency Act 2000 and the Enterprise Act 2002. The insolvency legislation provides four procedures for companies in financial difficulties: administration, voluntary arrangement, receivership, and liquidation.

23. Value Added Tax

This chapter discusses value added tax (VAT) in the UK. VAT is charged on supplies of goods and services made in the UK. Where a person makes taxable supplies in excess of a set limit in any one-year period, he must register with HMRC. He must then account to HMRC for VAT on all taxable supplies made. The total amount payable may be reduced by the amount of VAT paid on certain taxable supplies made to him. The liability to pay VAT to HMRC rests on suppliers of goods and services. However, the cost of the tax is actually borne by suppliers’ customers who are charged VAT on the goods and services they purchase. VAT is charged in the UK under the Value Added Tax Act (VATA) 1994.

13. Company meetings and resolutions

This chapter describes the meetings of shareholders and the resolutions passed during such meetings. It covers the types of general meeting; resolutions; calling a general meeting; notice of meetings; proceedings at meetings; minutes and returns; and written resolutions.

29. Sale of a business to a company

A sole trader or partnership may decide, for a variety of reasons, to incorporate the business. Incorporation will give rise to a number of tax and other problems. This chapter considers these problems and how they can be avoided, or at least mitigated. It shows that the tax rules are the most important consideration in this area, since if they are not appreciated, an unexpected tax bill can cause very serious cash flow problems. They include rules on income tax, capital gains tax, VAT, and stamp duty/stamp duty land tax.