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A partnership is a relatively simple way for two or more persons to set up and run a business together with a view to making a profit. Partnerships can take many forms. Legal persons other than individuals can also be partners in a partnership.

There are two main types of partnership, a conventional one with two or more partners in the business. There is also a limited liability partnership or LLP, this more complex structure provides partners with the protection of limited liability, just as with a company.

HMRC’s manuals are clear that a partnership may exist without a written agreement or on the basis that a later written agreement gives formal expression to an existing oral agreement. The date of the formation of the partnership remains the date on which the terms of the oral agreement were implemented.

Where, however, a written agreement creates a partnership where none exists already, it is effective only from the date of execution and implementation of the written agreement. It has no retrospective effect.

A wasting asset is an asset which has a predictable life of 50 years or less. HMRC’s guidance is clear that when you dispose of an asset, you are required to estimate its predictable life based on the nature of the asset and your intended use of the asset when you originally acquired it.

Certain chattels are always treated as wasting assets, for example, plant or machinery. Such items will always be wasting assets. This rule applies no matter what the actual life of the item of plant or machinery proves to be.

The residual or scrap value of a wasting asset is the amount it will be worth at the end of its predictable life. Again, this has to be estimated by reference to the position as it was when the asset was acquired by the person making the disposal.

The owner of a wasting asset may incur additional expenditure which enhances the value of the asset. This will not affect the predictable life of the asset but may alter its scrap or residual value.

The UK’s Digital Services Tax (DST) came into operation on 1 April 2020. This tax is designed to ensure that the major social media, search engine and online retailers are subject to a 2% tax on revenues generated from the participation of UK users of their services.

Businesses are liable to the DST when the group’s businesses worldwide revenues from the specified digital activities are more than £500 million and more than £25 million of these revenues are derived from UK users. There is an allowance of £25 million, which means a group’s first £25 million of revenues derived from UK users will not be subject to Digital Services Tax.

The following three services are considered digital services activities for the purposes of DST:

• a social media service,
• an internet search engine; or
• an online marketplace.

A group can make a voluntary election to calculate the liability to DST using an alternative basis of charge provision. The alternative basis of charge will benefit groups making a loss or operating at a low margin on their UK digital services activity.

There will be a review of DST by HM Treasury before the end of 2025 which will be laid before Parliament.