A partnership is a reasonably straightforward way for two or more legal persons to establish and operate a business with the intent to make a profit. Partnerships can take various forms, and legal entities other than individuals can also be partners.
There are two main types of partnerships: the traditional partnership, involving two or more partners, and the more complex limited liability partnership (LLP), which offers the benefit of limited liability, similar to that of a company.
HMRC’s guidance clarifies that a partnership can exist without a written agreement, with a later written agreement simply formalising an existing oral agreement. In such cases, the partnership's formation date is when the terms of the oral agreement were first implemented. However, if a written agreement establishes a new partnership, where none previously existed, it is only effective from the date it is executed and implemented, with no retrospective effect.
HMRC's internal guidance for determining the existence of a partnership advises its officers 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.
