The residence of a partnership is not generally an issue for tax purposes. UK partnerships are not themselves liable to tax. The liability to tax is that of the partners and it is the residence of the partners which is important. It is for this reason that in 2006 HMRC discontinued their practice of issuing certificates of residence for partnerships.

What is relevant for UK tax purposes is where the business of the partnership is carried on. This is the effect of Section 111 and 112 TA 1988 which deal with the tax treatment of partnerships controlled abroad. The key test in Section 112 is whether “the control and management of the trade, profession or business is situated outside the UK” because this will determine the tax treatment.

The recent case of Mark Higgins Rallying v HMRC TC 1200 analysed the requirements for this test. The conclusion of the tribunal was that the appropriate tests for the location of control and management of the partnership should be the same as those which apply to companies. This means that all the issues examined in Untelrab, Wood v Holden and in the more recent case of Laerstate are relevant here. The place where the partners meet (or sign documents) is important, but not conclusive; it is where the real management at the highest level takes place which is conclusive.