Is there a partnership?

By Tolley

The following Personal Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

Is there a partnership?
Introduction
The Partnership Act
Guidance from case law
Accidental partnerships
Documentation

Introduction

It is not always clear whether a partnership exists. Some guidance can be found in the Partnership Act 1890 (subscription sensitive), and the courts have provided a significant volume of case law. This is discussed below.

It is, however, not uncommon to find that people have been trading in partnership without realising it. Care is thus needed, as the special tax rules which apply to partnerships can give unexpected results, particularly where losses are concerned. See the Partnership losses guidance note.

The Partnership Act

The Partnership Act excludes the following business relationships from being partnerships, if there are no other factors:

•the existence of a joint tenancy, tenancy in common, joint property, common property, or part ownership of property (this remains the case whether or not the tenants or owners share any profits arising from the use of the property)