V2.110 Partnerships and deemed partnerships
Meaning of a partnership
A partnership is 'the relation which subsists between persons carrying on a business in common with a view of profit'1, and the partners are collectively referred to as 'a firm'2. This definition gives rise to three points.
• First, the 'relation which subsists' may be an oral or written contract, but the existence of a partnership may be inferred from the intention of the parties without there being an express agreement, and in each case it is necessary to consider the circumstances and intention of the parties. The existence of a partnership requires a consensus between the partners per Bridgeman3 where a business carried on by the appellant and his infant children was held not to be a partnership. The relation between members of a body corporate is not a partnership4.
• Secondly, there must be a 'business'5, this being defined as including every trade, occupation or profession6. The term 'business' is more widely defined for VAT purposes (see Division V2.2).Co-ownership of property does not by itself create a partnership, whether or not profits from the use of the property are shared7 as was seen in Morgan-Jones8.
• Thirdly, there must be a 'view to profit'9. The sharing of gross income does not by itself create a partnership10; but receiving a share in the profit (ie the net income) of a business is prima facie evidence of partnership, although not by itself conclusive11
Legal and VAT status of partnerships
A partnership is not
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