VATREG08550 - Entity to be registered: partnerships: holding out
The concept of ‘holding out’ is provided for in the Partnership Act 1890, section 14 in the following terms. It is the practice of leading, or allowing, others to believe that you are something which you are not. If, as a result of such actions, a person is ‘given credit’ by others, then that person is liable as if he had, in fact, been what he said, or had allowed others to believe, that he was. Thus a person who leads, or allows, others to believe that he is a partner in a firm, and is ‘given credit’ by others on the basis of his actions, will be liable for the debts and obligations of the partnership as if he had, in fact, been a partner in the firm.
Whilst the expression ‘given credit’ is not defined, it should not be construed in a technical or restrictive sense, but as describing any transaction with the firm.
Consequently, where two or more people notify for VAT registration submitting a completed VAT 2 together with the VAT 1, or even simply entering their entity on the VAT 1 as a partnership, they can effectively be said to be ‘holding out’ as a partnership.
Similarly, where two or more persons are holding themselves out to other traders and third parties as a partnership, we should treat them as if they were a genuine partnership as well. This is so that the Department is not put at a disadvantage in its relationship with that business as against third parties.