PM131700 - Scottish partnerships

The definition of a Scottish firm is found in S4(2) Partnership Act 1890, “in Scotland a firm is a legal person distinct from the partners of whom it is composed, but an individual partner may be charged on a decree or diligence directed against the firm, and on payment of the debts is entitled to relief pro ratâfrom the firm and its other members.”

Unlike its English, Welsh or Northern Irish counterpart, a Scottish partnership is a legal person. This has very few consequences for tax purposes. Where the differing legal systems would produce different results as between Scotland and the rest of the United Kingdom, specific legislation has been enacted to preserve equality of treatment; for example assessment of partnership profits (see PM141000) and capital gains (see CG27000). Where the tax legislation itself would produce different results, the courts have directed that:

‘…it is desirable to adopt a construction of statutory words which avoids differences of interpretation of a technical character such as are calculated to produce inequalities in taxation as between citizens of the two countries.’

(Viscount Simons at page 244 in Rex v General Commissioners of Income Tax for The City of London (ex parte Gibbs and Others) [1940] 24TC221).