Tribunal – partners’ relationship to partnership assessments
A recent Tribunal case examined an appeal from a taxpayer against multiple assessments and amendments to his self-assessment returns. The crux of the case centred on whether a partnership existed – HMRC argued that the taxpayer was a member of such. A related question was that, if there was found to be a partnership could the taxpayer appeal against the amendments to his self-assessment returns?
The background to this case is complicated. The taxpayer, an architect by profession had worked on a joint venture basis with another architect for a number of years. HMRC contended that the joint venture was a partnership, a decision the taxpayer did not accept. The ‘partnership’ ended acrimoniously in 2003 when the taxpayer’s ‘partner’ sold a division of his business. The taxpayer initiated court proceedings claiming that he was entitled to a share in certain assets on the grounds that a partnership existed. The dispute was settled out of court on the basis of a Tomlin order.
The tribunal found that the taxpayer was not prevented from arguing in this appeal that there was no partnership even on the basis that the Tomlin order included a schedule which assumed there was a partnership.
On a detailed analysis of the facts the tribunal ultimately decided that on the basis of the evidence presented a partnership existed for the years under assessment. It was for the taxpayer to prove that, on the balance of probabilities, there was no partnership. This the taxpayer was unable to do, incidentally the taxpayer did not appear at the tribunal but sent his representative instead; a move that certainly did not help his case.
However, the tribunal ultimately allowed the taxpayer the right to appeal against the assessments to his self-assessment returns as they relate to his liability to tax on his share in the ‘partnership’. The tribunal hearing was only preliminary and did not comment on the correctness or otherwise of the partnership returns. If the taxpayer and HMRC are unable to reach agreement, the matter will have to come before another tribunal to consider the validity of the amendments and assessments.