Partnerships

Partnerships

A partnership is defined as the relationship between 'persons carrying on a business in common with a view of profit'. The word ‘persons’ in this definition includes artificial as well as natural persons. This could be an individual, a body corporate or the trustee of a settlement.

There are a number of different types of partnership that may be formed under English law:

•
a general partnership, in which all partners are jointly liable for debts and obligations of the partnership
•
a limited partnership, which consists of:
1. ◦
  one or more general partners, who are liable for all debts and obligations of the partnership, and
2. ◦
  one or more limited partners, whose liability for the partnership's debts and obligations is limited to the amount they have invested
•
a limited liability partnership (LLP) which, unlike a general or limited partnership, is liable for its own debts—the liability of the members of an LLP is normally limited to the amount of their financial contribution

A general or a limited partnership is not a corporate entity; rather it is a relationship between its partners.

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Latest Tax News

Tax weekly highlights—5 March 2026

This week's edition of Tax weekly highlights includes: (1) confirmation that the Spring Forecast did not make any tax announcements, (2) updates on the final stages of, and various government amendments to, the Finance Bill 2026, (3) the FTT in Aspire in the Community allowing pre-registration input tax recovery, (4) News Analyses being published on the UT’s decision in UK Care No 1 partly allowing the appeal but upholding the disallowance of the compensatory element of an early redemption premium on loan notes under the loan relationships imported loss rule and the FTT’s decision in Outram on setting aside discovery assessments, and (5) two new LBTT reliefs.

UT partly allows appeal but upholds disallowance of the compensatory element of an early redemption premium on loan notes under the loan relationships imported loss rule (UK Care No 1 Ltd v HMRC)

Tax analysis: In UK Care No 1 Ltd, the Upper Tribunal (UT) allowed the appeal of the appellant company (UKC1) in part. It considered section 327 of the Corporation Tax Act 2009 (CTA 2009), which provides for the disallowance of 'imported losses' (ie losses arising while the company is not within the UK tax net) under the loan relationships regime. The case concerned an early redemption of loan notes. The UT held that CTA 2009, s 327 can apply to a ‘loss’ which includes expenses, and it upheld the disallowance of the compensatory (non-penalty) element of an early redemption premium as an imported loss; however, it allowed relief for the unamortised issue costs and issue discount as referable to the post-migration period.

FTT sets aside discovery assessments for being out of time because inaccuracy was not deliberate (Outram and another v HMRC)

Tax analysis: In Outram and another v HMRC, the First-tier Tax Tribunal (FTT) allowed the taxpayers’ appeals against discovery assessments issued to disallow trading losses claimed under an ineffective avoidance scheme. The FTT found that the assessments, which relied on deliberate behaviour, were out of time.

FTT allows recovery of pre-registration input tax by reference to post-registration use (Aspire in the Community Services Ltd v HMRC)

Tax analysis: In Aspire in the Community Services Ltd v HMRC, the First-tier Tax Tribunal (FTT) decided that, when HMRC allows a partly exempt person to treat as input tax VAT on costs incurred before the effective date of VAT registration (EDR), it is how the costs are used after the EDR which matter because that is the effect of the statutory legislation.