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.