Tax implications of contractual joint ventures
Produced in partnership with Arun Birla and Hannah Gray of Paul Hastings (Europe) LLP and Sara Stewart of Vinson & Elkins RLLP
Tax implications of contractual joint ventures

The following Tax guidance note Produced in partnership with Arun Birla and Hannah Gray of Paul Hastings (Europe) LLP and Sara Stewart of Vinson & Elkins RLLP provides comprehensive and up to date legal information covering:

  • Tax implications of contractual joint ventures
  • What is a contractual joint venture?
  • Tax implications of establishing a contractual joint venture
  • Tax implications of operating a contractual joint venture
  • Tax implications of terminating a contractual joint venture
  • Avoiding the existence of a partnership

This Practice Note considers the UK tax aspects of the establishment, operation and termination of contractual joint ventures, and also considers how the joint venture parties may distinguish such an arrangement from a partnership. It is assumed for the purpose of this Practice Note that the joint venture parties are UK tax resident corporate entities and that the business of the joint venture is located in the UK (for information on joint ventures with a non-UK element, see Practice Note: Tax implications of international joint ventures).

What is a contractual joint venture?

A joint venture is a commercial arrangement entered into by two or more independent parties. There are no specific laws, including tax laws, applicable to joint ventures and no technical legal meaning of the term.

A joint venture can take many forms. For example, it may be operated through a separate joint venture vehicle, commonly a limited liability company or a partnership. Alternatively, and at its simplest, it may be an arrangement between participants whereby those participants do not form a separate legal entity, but rather associate with one another simply by means of a contractual arrangement. The relationship between the joint venture parties in such a contractual joint venture will be governed by a framework of contracts, setting out the rights and duties of the parties,