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A deceased partner鈥檚 Income Tax liability is a personal liability, not a business liability.

Example

the capital account may be shown as follows:-

Capital account as at 31.3.12 =拢106,510

Add share profit + 拢78,750

Less income tax - 拢15,670

Less drawings - 拢58,000

Balance at 31.3.12 = 拢111,590

You should check first that the Income Tax liability represents tax unpaid at the death. If so, add it back to make the capital account 拢127,260. You can then accept the Income Tax liability as an additional liability of the estate unless it is already shownas a liability at box 82 of form IHT400.