My client is in partnership with his son and jointly owns the farm where his son and family live. The farm is currently running at a loss and the partnership was created on the advice of the accountant as my client borrowed money to put into the business to keep the farm running and used his own home as security.

My c is 84 and is in receipt of HR AA and does no work in the business. His son runs the farm and takes a salary (from the loan provided by his father) although the recent accounts show that the farm is still making a loss.

My c claimed PC and has been refused on the basis that he is s/e and that he is entitled to 1/3 of the profits. When it was pointed out to the DM that there were no profits we have been advised that some expenses in the business that are disregarded for tax purposes are not similarly ignored by the Pension Sevice and consequently they can show that the farm is making a profit.

We have appealed and asked for clarification on some of the points but am unsure whether to base the appeal on the fact that he is not employed and therefore not entitled to any remuneration, or that until the farm is showing any profit then the p/ship agreement is that he cannot withdraw any funds which the accountant has said is the basis of their agreement.

Any help with this would be appreciated.

As he's not working in the business, it will surely be treated as a capital asset?