Partnerships

This subtopic provides guidance on general partnerships, limited partnerships and limited liability partnerships (LLPs).

General partnerships

The Partnership Act 1890 (PA 1890) sets out the legal framework that applies to general partnerships.

A partnership under PA 1890 is described as the relationship that subsists between persons (which includes individuals or corporate entities) carrying on a business (which includes every trade, occupation and profession) in common with a view of profit.

Nature of a general partnership and its legal framework

PA 1890 does not provide a complete code of partnership law and expressly preserves the rules of equity and common law applicable to partnerships, except where they are inconsistent with the express provisions of PA 1890.

As a partnership is not a separate legal entity from its partners, it cannot acquire rights, incur obligations or hold property in its own right. It is therefore important to distinguish between partnership property and property that personally belongs to an individual partner.

Each partner is an agent of the partnership and their other partners for the purposes of the partnership's business and can bind the partnership, and

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All in? Court confirms when a settlement is 'made' for the purposes of excluded property (Accuro Trust (Switzerland) SA v The Commissioners for HMRC)

Private Client analysis: This case considered the meaning of 'relevant property' under the settlements regime of the Inheritance Tax Act 1984 (IHTA 1984) and, in particular, the time at which this definition is to be tested. The question arose as to whether the trustees of an offshore trust established by a non-UK domiciled settlor were subject to the UK settlements regime in respect of property added to the trust after the settlor became deemed domiciled in the UK, or whether they were exempt from such charges as the trust consisted solely of excluded property. The First-tier Tribunal (FTT) held that whether trust property is excluded property is based on the status of the trust at the time that it was established, not at the time that the property in question was added to the settlement. As a result, the trust in this case did consist solely of excluded property and no inheritance tax (IHT) charges arose as a result of either the ten-year anniversary or capital distributions. The FTT was also asked to consider whether their jurisdiction was appellate, or supervisory only. The FTT held that, while their jurisdiction was supervisory, the questions raised by the trustees were relevant in establishing whether HMRC had acted reasonably and that the outcome (ie that the paid IHT should be refunded and that no further IHT was due) would be the same in either case. Written by Katherine Willmott, senior associate solicitor at Foot Anstey LLP.

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