Partnership problems

The taxpayer retired from a partnership in 1996. He then set up a limited company. He came together with another individual B who had traded for several years as an architect under the name Studio Baad to work on a joint basis.

HMRC considered that this constituted a partnership but the appellant did not agree.

There was no written agreement between the two individuals although a draft agreement existed and the relationship ended in dispute in 2003.

Part of Studio Baad had been sold. The appellant had taken proceedings against B claiming that there was a partnership and that he was entitled to a share in the assets. The matter was settled by a Tomlin order and B paid the appellant £250 000.

HMRC opened an enquiry into the partnership returns for Studio Baad writing to...