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HMRC internal manual

VAT Refunds

Claims for overdeclared output tax: Who can claim: General partnerships in England and Wales

A partnership is an unincorporated association governed by the Partnership Act 1890 and comprises a number of partners.

Partnerships do not have legal personality. It is the partners jointly who carry on the business of the firm and who bear the liability for the debts and obligations of the firm.

A partnership cannot sue or be sued in the name of the firm and all rights and obligations lie with the individual partners.

While the partnership continues in existence, claims must be made by one of the partners and repayments must be paid into the partnership’s trading account.

One would normally expect the claim to be made in the name of the partnership, i.e. the firm name or the name which is shown on the VAT register for the claimant.

However, a claim for overdeclared VAT under Section 80 of the VAT Act 1994 by a partnership can be claimed by any person who has signed the Form VAT2 for that partnership and has not notified us in writing under Regulation 5 of the VAT Regulations 1995 that he has ceased to be a partner.

Once the partnership has been dissolved, claims may be made by any person who acted as a partner in the firm, for any period during which he acted as a partner.

For instance, if a partnership of Mr Anatole, Mrs Berthe and Miss Célestine overstates its output tax liability and, shortly thereafter, is dissolved, the claim may be made by Mr Anatole, Mrs Berthe or Miss Célestine either jointly or individually.

If output tax is overdeclared by a partnership comprising Mr Anatole, Mrs Berthe, Miss Célestine and Dr Désiré and, after a year, Miss Célestine and Dr Désiré leave so that there only remains a partnership of Mr Anatole and Mrs Berthe which is disbanded a year later, Mr Anatole and Mrs Berthe can claim for overdeclarations made during the entire life of the partnership whereas Miss Célestine and Dr Désiré can only claim for the periods during which they were partners.

You should be very careful, when dealing with claims from partners of firms that have been dissolved or claims from ex-partners of existing firms, to ensure that claims are not duplicated. You should be able to find the names of all partners, past and present, and their periods of membership of the firm on the VAT2 forms on Electronic Folder.