There is no one single factor that determines whether a partnership exists, as it is a combination of several different factors. However, the following points will usually have to be considered when establishing if a partnership exists:
Trading in common with a view of profit
To fall within the definition of a partnership, the partners must be carrying on a business in common and doing so with a view of profit.
In other words do the activities of the partners actually constitute a trade or business?
HMRC specifically confirm that property and investment management, carried on as a commercial venture, is within the definition of 'business' for this purposes1. Such partnerships are sometimes known as 'investment partnerships' and are usually in the form of limited partnerships or LLPs (see B7.106, B7.107 respectively).
In Ilott2, four people had agreed a business idea in principle, acquired a domain name and prepared initial proposals etc. On a subsequent breakdown of the relationship between the individuals it was held that there was no partnership in place. The preparatory activities were not enough to amount to carrying on a business with a view of profit.
In Brain Disorders Research Limited Partnership3 the Court of Appeal found