Samarkand – Court of Appeal of England and Wales indicates uncertainty on whether a partnership exists when its only partners are preliminary partners

Arden LJ followed Eclipse in finding that a film tax shelter partnership was not carrying on a trade given that the film it acquired was immediately leased out for a stream of licensing payments which matched its debt servicing commitments - so that in essence its business was “the payment of a lump sum in return for a series of fixed payments over 15 years.” As a “non-trading partnerships,” the targeted trade loss relief was not achieved.

Respecting a finding made below that the partnership did not exist before the the taxpayers became members, she stated:

Section 1 of the Partnership Act 1890 defines partnership as "the relation which subsists between persons carrying on a business in common with a view of profit". The question which arises is whether that test is satisfied where two or more persons carry on a business in common with a view of profit, not for themselves, but for future new partners who will for all practical purposes replace them.

…[I]n view of its potential wider significance I would be reluctant to express a view upon [this issue] unless it were necessary to do so.

Neal Armstrong. Summaries of Samarkand Film Partnership No. 3 & Ors v Revenue and Customs, [2017] EWCA Civ 77 under s. 96, s. 248(1) - business and s. 96(1)(a).