The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the VAT implications affecting businesses that trade as a partnership.
The Partnership Act 1890, s 1(1) provides the following definition of a partnership:
1)“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.2)But the relation between members of any company or association which is-a)registered under the Companies Act 2006, orb)Formed or incorporated by or in pursuance of any other Act of Parliament or letters patent, or Royal Charteris not a partnership within the meaning of this Act.”
“Partnership is the relation which subsists between persons carrying on a business in common with a view of profit.
But the relation between members of any company or association which is-
registered under the Companies Act 2006, or
Formed or incorporated by or in pursuance of any other Act of Parliament or letters patent, or Royal Charter
is not a partnership within the meaning of this Act.”
De Voil Indirect Tax Service V2.110
A partnership is an unincorporated association in which the agreement between the parties is such that the relationship between themselves and third parties is governed by the Partnership Act.
The existence of a partnership is a matter of fact and usually has the following elements:
there must be a business
the business must be carried on by two or more persons carrying on a business in common with a view to making a profit
the persons share any net profits and losses arising from the business activities
the parties have the power individually, by actions or words, to legally bind other members of the firm in relation to its dealing with third parties
In Scotland a partnership is a legal person distinct from the partners who compose it. See VATDSAG04350 for more information on Scottish partnerships.
From a VAT perspective the partnership itself will be treated as the taxable person.
A partner does not have to be an actual person. For example, a limited company counts as a ‘legal person’, and can also be a partner in a partnership.
It is important to note that a partnership is a different legal entity to a sole trader. This means that supplies are treated independently from a VAT perspective. As a result if a business trades as a sole trader as well as in a partnership with another person, any income
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
‘Hold-over’ relief allows for the deferral of a gain that would otherwise arise in relation to a disposal. No capital gains tax (CGT) is due in respect of the disposal, but the base cost of the asset for the transferee for the purpose of a future disposal is reduced by an amount equal to the gain
IntroductionUK tax must be withheld on UK payments including:•interest•royalties•rental incomeWithholding tax may be reduced under double tax treaties (DTT) or European directives, both of which may be subject to making a formal claim.This guidance note outlines the rules for UK withholding tax, and
From 6 April 2015, an individual can elect to transfer 10% of the personal allowance (£1,250 in 2020/21 and 2019/20) to the spouse or civil partner where neither party is a higher rate or additional rate taxpayer. The legislation calls this the ‘transferable tax allowance’ but the GOV.UK website
Time for paymentTwo statutory rules apply on death:•tax is ‘due’ six months after the end of the month of death and carries interest from the ‘due’ date until paidThere is a possibility of payment by instalments, but this applies to certain types of property only ― see the ‘Availability of
To view our latest tax guidance content, sign in to Tolley Guidance or register for a free trial.