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HMRC internal manual

VAT Registration

Entity to be registered: partnerships: registration of trusts as partnerships

Where more than one person holds title to land or property, section 34 of the Law of Property Act 1925 deems that a statutory trust for sale exists. Where those persons commercially exploit such land or property, a liability to register for VAT may arise (subject to the normal registration rules). As it is only the owners who are able to commercially exploit the land or property (letting, development, and so on), any VAT registration must be effected in joint names. There is no specific provision for the registration of trusts, so any joint registration must either be as a partnership (VAT Act 1994, section 45) or as some form of unincorporated association (VAT Act 1994, section 46). Legal advice suggests that the most appropriate option is to treat co-owners as a partnership for VAT purposes.

In accordance with the legal opinion, where co-owners become liable to register for VAT, they should be registered as a partnership for VAT purposes. However, where the co-owners are the same as the partners in a firm, a separate registration will not normally be required. For example, where A, B, C & D are co-owners of land, but are also the partners in a firm of solicitors, they should account for all the activities under one registration.

Due to restrictions imposed by the Law of Property Act, title to land and property can only be held in a maximum of four names. This can create a situation where four nominated people hold title to a property on behalf of a larger body, for example, A, B, C & D hold title to a property on behalf of a firm of solicitors A, B, C, D, E & F. Where it is clear that the property is in substance an asset of the larger partnership, we would not require separate registration of the co-owners.