skip to navigationskip to main content

When does a partnership exist?

A partnership is a relatively simple way for two or more legal persons to set up and run a business together with a view to profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership.

There are two main types of partnership, a conventional one with two or more partners in the business. There is also a limited liability partnership or LLP, this more complex structure provides partners with the protection of limited liability, just as with a company.

HMRC’s manual is clear that a partnership may exist without a written agreement, on the basis that a later written agreement gives formal expression to an oral agreement already existing. The date of the formation of the partnership remains the date on which the terms of the oral agreement are implemented.

However, when a written agreement creates a partnership where none exists, it is effective from the date of execution and implementation of the written agreement. It has no retrospective effect.

HMRC’s own internal advice when determining if a partnership exists states that… it is important that you establish all of the facts to determine the true relationship between the parties. This will include finding out what the intentions of the parties were. No single factor is likely to be conclusive on its own. You will need to form an overall view, based on all the facts and evidence.

When does a partnership exist?

A partnership is a relatively simple way for two or more persons to set up and run a business together with a view to making a profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership.

There are two main types of partnership, a conventional one with two or more partners in the business. There is also a limited liability partnership or LLP, this more complex structure provides partners with the protection of limited liability, just as with a company.

HMRC’s manuals are clear that a partnership may exist without a written agreement or on the basis that a later written agreement gives formal expression to an existing oral agreement. The date of the formation of the partnership remains the date on which the terms of the oral agreement were implemented.

Where, however, a written agreement creates a partnership where none exists already, it is effective only from the date of execution and implementation of the written agreement. It has no retrospective effect.

Working with you

Whether you're starting from scratch or have been in business for years you'll benefit from working with D.R.E. & Co. advice on how to take you to the next level.

fixed-quote-man.jpg

About us

We work closely with our clients and act for a broad range of business....

business-advice-couple.jpg

Get in touch

Simple way to contact us. Just fill in a simple form.

free-consultation-couple.jpg

Our services

Find out details about what we can do
for you.