Did a partnership in fact exist?

This case concerned two architects, who had a business relationship for some four years before it ended in dispute. Separate (non-tax) court proceedings had concluded that a partnership had in fact been in existence, but that did not mean the taxpayer could not content that it had not been in existence, at least for tax purposes.

While there was no formal partnership agreement, and the taxpayer was not a signatory of the bank account maintained in the relationship, it appeared that the alleged partners themselves considered a partnership was in existence, as income tax returns for the years in question had been made on that basis. The tribunal dispensed with the partnership question in short order.

However, the tribunal went on to find that a partner was not bound by the partnership return when submitting his or her own return of income, and had the right to declare what he considered to be the correct amounts. He also had a right to appeal any assessments raised which derived from his partnership share.

The full text of the case is available at http://www.financeandtaxtribunals.gov.uk/judgmentfiles/j4639/TC00276.doc