This is how it will work:
- Make an assumption that your profits or losses arise evenly throughout the tax year.
- Any profits arising before the partnership will be assessed on your partner. For example if taxable profits made were £12k for the tax year and partnership was formed half way through the year, then £6k of taxable profits will belong to your partner and the remaining £6k profits will be split equally between you and your partner - £3k each on the basis it is a 50:50 partnership.
- You do not need to start preparing another set of books. Make sure there is a formal partnership agreement in place.
- In terms of tax returns you will need to prepare a partnership tax return (SA800). This would show the partnership's profits and the split of these profits to the partners.
- Each partner's share of the above profits (ego £3k each) would go into your individual tax returns SA100. Your partner's tax return from example above would show £9k profits (£6k pre partnership and £3k post partnership)
I hope this helps.
Always appoint a good accountant to help you: http://www.southsideaccountants.co.uk/Acct-Role.pdf