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HMRC internal manual

VAT Refunds

Late claims for input 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 they 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 under which the partnership is registered for VAT. However, a claim for an amount of input tax underclaimed by a partnership can be claimed by any person who has signed the Form VAT2 for that partnership.

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 Adam, Mrs Barbara and Ms Cecylia understates its input tax entitlement and, shortly thereafter, is dissolved, the claim may be made by Mr Adam, Mrs Barbara or Ms Cecylia either jointly or individually.

If the input tax entitlement is understated by a partnership comprising Mr Adam, Mrs Barbara, Ms Cecylia and Lady Dorota and, after a year, Ms Cecylia and Lady Dorota leave so that there only remains a partnership of Mr Adam and Mrs Barbara which is disbanded a year later, Mr Adam and Mrs Barbara can claim for input tax understatements made during the entire life of the partnership whereas Ms Cecylia and Lady Dorota 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.