The criteria for a HMRC tax partnership are based on close cooperation between the parties, whether they share the costs and whether they share the benefits, and not whether there is a written agreement that recognizes the partnership. Of course, the situation is very different when the parties create a separate limited company, whose shareholders are both shareholders, or when they engage in a formal partnership agreement in which they integrate their resources and assets into a common structure in which they share both the benefits and the potential for losses on a common and multiple basis. However, in this case, this institution will provide delivery to the end consumer. Finally, the common owners of the land, although not technically a partnership, tend to be regarded by HMRC as a partnership, so that their revenues would normally be considered outside the scope of VAT, but they would then register (if any) as a VAT partnership to account for VAT on each sale they make. “In our judgment, the mere fact that compensation for the services provided was measured by the share of profits is not converted into company agreements that are essentially service delivery agreements.” It is tempting for the promoter/developer to consider that he has only a share of profits, so that his income does not go within the scope of VAT. That will almost never be the case. A developer, for example, generally has no rights in the country (although this is not always the case), but acts as a form of highly competent real estate advisors and negotiators. Its service is therefore taxable and the value of the consideration it receives depends on a fictitious “profit”. When a contractor acts in this function, he or she is generally considered to be the owner of the contract, since the owner of the land ends up selling (or entering into leases for them). The owner is therefore a kind of taxable service (although it may be considered a new construction, but this alone could lead to the need for VAT registration). “In the agreement that Fivegrange Ltd was to pay 5% of the profits from the Leicester Square project, it was expressly stated at Point 8 that Fivegrange Ltd should not be a partner of Crofthaven. It seems to me that the intent of the parties was confirmed by the fact that Fivegrange Ltd was not in danger if the project was the result of a loss.
Similarly, it was clear that Crofthaven paid and owned the property, and Fivegrange was not a co-owner. The joint venture should be maintained by and on behalf of Crofthaven and managed and controlled through the Crofthaven Board of Directors. Crofthaven should therefore be solely responsible for the management and control of the project. In these circumstances, it does not seem possible to say that a partnership exists between the two companies. VAT was not shown on the 5% until Fivegrange. The Commissioners argued that this money was a counterpart to the provision of services in Crofthaven and was taxable at the normal rate, but the complainant argued that the money represented the share of profits of a joint venture outside the scope of UK VAT. The first agreement provided that Fivegrange served as a real estate advisor for CP. These services have been subject to an annual fee subject to VAT. The second agreement dealt with the aspect of the joint venture. The two companies worked in a “joint venture” through the development of the property. However, the joint venture would be on behalf of Crofthaven and controlled by the Crofthaven Board of Directors, which was able to raise funds for the company.