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HMRC internal manual

VAT Registration

HM Revenue & Customs
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Entity to be registered: Partnerships: Liability of partners in England and Wales

In England and Wales, all the partners in a firm are liable:

  • jointly for all the debts, and
  • jointly and severally for the obligations of the firm which arise while they are members of that firm.

However, a partner’s liability does not end automatically when he leaves a partnership. Under the VAT Act 1994, section 45, a partner continues to be liable for the debts and obligations of the partnership until such time as HMRC is notified in writing that he or she has left the firm.

The continuing liability of partners under the VAT Act 1994, section 45(2) was confirmed in the decision given by the VAT Tribunal in the case of The Bengal Brasserie, LON/90/604X, (VTD 5925).

Since the partners in a partnership are liable jointly for the debts of the firm, it means that any notice of assessment must be served on all the partners individually. The partners are collectively liable for the total amount of the debts in question but the entire debt may be enforced against a single partner. It is then up to that partner to recover any money owing to him from the other partners.

Under the VAT Act 1994, section 45(3) and the Partnership Act 1890, section 17(2), even after a partner has left a firm, he will still be liable for the debts and obligations which arose during the time when he was a partner in the firm. Therefore, even if the partnership has notified the Commissioners of the change in composition of the partnership, he will still be liable for any assessments pertaining to when he was a partner.