Practice Area
Panel
- Contributing Author
Qualified Year
- 2019
Education
- LPC, BPP Law School (2017)
- LLB, University of Nottingham (2016)
7 Contributions by Abigail Hung
PRACTICE NOTES
Choosing a UK joint venture structure: tax impacts for contractual arrangements, partnerships and joint venture companies from establishment through operation to exit
This Practice Note examines how the principal UK tax considerations arising on the formation, operation and eventual termination of a joint venture may affect the decision to proceed via a contractual arrangement, a joint venture company (JVCo) or a partnership, and how those tax consequences can shape the preferred structure. For the purposes of this Practice Note, it is assumed that the joint venture participants are UK tax resident corporate entities and that any separate joint venture vehicle established is also UK tax resident. For information on joint ventures with a non‑UK tax element, see Practice Note: Tax implications of international joint ventures.
Types of structure available for a joint venture
A joint venture is a commercial arrangement undertaken by two or more independent parties. There are no specific laws, including tax legislation, that apply uniquely to joint ventures, and the expression has no technical legal definition...
Tax
PRACTICE NOTES
UK tax issues on forming joint venture partnerships: entity choice, partner profit allocation, asset contributions, corporation tax (gains/income), stamp taxes (SDLT, LBTT, LTT), VAT and available reliefs
This Practice Note examines the UK tax considerations when setting up a joint venture run through a partnership. For the purposes of this Practice Note, it is assumed that:
the joint venture participants are UK tax resident corporate bodies
the joint venture partnership vehicle is likewise UK tax resident; and
the venture’s activities are conducted in the UK
For information on:
operating and winding up a joint venture partnership, see Practice Note: Tax implications of operating and terminating a joint venture partnership; and
joint ventures with a non-UK dimension, see Practice Note: Tax implications of international joint ventures
This Practice Note does not address certain investment partnerships that are unit trust schemes which may not be treated as transparent for tax purposes.
What types of partnership may be used for a joint venture?
A joint venture may employ one of the following three main partnership forms as the vehicle, with the parties as partners in that vehicle:
unlimited or general partnership
limited partnership
limited liability partnership (LLP)
A partnership is defined as ‘the relation which subsists between persons carrying on a business in’...
Tax
PRACTICE NOTES
UK tax treatment of contractual joint ventures: corporation tax, VAT, establishment, operation and termination, and avoiding partnership status
This Practice Note reviews the UK tax considerations relevant to the establishment, operation and cessation of contractual joint ventures, and explores how the participants might differentiate such an arrangement from a partnership. For the purposes of this Practice Note, it is assumed that the joint venture parties are UK tax resident corporate entities and that the joint venture’s business is conducted in the UK (for information on ventures with a non-UK element, see Practice Note: Tax implications of international joint ventures)...
What is a contractual joint venture?
A joint venture is a commercial arrangement undertaken by two or more independent parties. There are no specific statutory rules, including tax provisions, that apply solely to joint ventures, and the term itself has no precise legal definition. A joint venture can be structured in various ways. It may operate through a separate joint venture vehicle, most commonly a limited liability company or a partnership. Alternatively, and in its most basic form, it can be an arrangement where the participants do not create a separate legal entity but instead collaborate solely under a contractual arrangement. The relationship between the joint venture parties in such a contractual...
Tax
PRACTICE NOTES
UK tax treatment of joint venture partnerships: operation, funding and termination (profits and losses, loan relationships, capital gains, stamp duty, SDLT/LBTT/LTT and VAT)
This Practice Note examines UK tax considerations for the operation and termination of a joint venture conducted through a partnership. For the purposes of this note, it is assumed that:
the joint venture parties are UK tax resident corporate entities
the joint venture partnership vehicle is also UK tax resident, and
the venture’s activities are undertaken in the UK
For information on:
the establishment of a joint venture partnership, see Practice Note: Tax implications of establishing a joint venture partnership, and
joint ventures with a non-UK element, see Practice Note: Tax implications of international joint ventures
This Practice Note does not address certain investment partnerships that are unit trust schemes which may not be treated as transparent for tax purposes.
Tax implications of operating a joint venture partnership
In broad terms, a joint venture partnership operates in the same manner as any other partnership, since partnerships are, by definition, joint undertakings. Accordingly, what follows are concise summaries of the tax consequences of running a joint venture partnership, with cross-references to more detailed Practice Notes where relevant...
Tax
PRECEDENTS
Joint venture shareholder indemnity and gross-up for UK Income Tax Act 2007 withholding on company payments
1 Deductions from payments and indemnity for tax deductions
1.1 [ Subject to any contrary provision in this Agreement, ] the Company will pay the Shareholders [ all amounts due under this Agreement ] free from deductions of any kind or any withholdings, except to the extent required by applicable law...
Tax
PRECEDENTS
UK tax and VAT clauses for a 50/50 corporate joint venture: residence, group relief and loss surrender under the CTA 2010
1 Definitions and interpretation
1.1 In this Agreement, and except where the context dictates otherwise, the expressions below shall bear the meanings set out here:
Relevant Proportion means, for the purpose of clause, the greatest share of the Company’s [ trading ] losses [ and other amounts eligible for relief from taxation ] that the law permits to be surrendered to the relevant Shareholder (or a member of its Shareholder Group), or, as applicable, the greatest share of the Company’s trading profits against which the Shareholder (or a member of its Shareholder Group) is permitted by law to surrender its [ trading ] losses [ and other amounts eligible for relief from taxation ] ;
VAT means United Kingdom value added tax [ and any other tax imposed in substitution for it OR , any other tax imposed in substitution for it and any equivalent or similar tax imposed outside the United Kingdom ] ;
2 Tax matters
2.1 [ The Company’s central management and control shall be exercised in the United Kingdom and the Parties shall use their respective [ best OR reasonable ] endeavours to ensure that the Company is treated...
Tax
CHECKLISTS
UK joint ventures: counterparty tax due diligence checklist (contractual, partnership and corporate structures; groupings; asset transfers; funding; transfer pricing; VAT and SDLT/LBTT/LTT; losses; degrouping; exit)
This checklist presents core tax queries to raise with a joint venture counterparty. The goal is to identify the principal UK tax considerations that could arise for the remaining joint venture participant(s) and/or any joint venture vehicle, with those potential matters highlighted in the list. It is assumed that the parties are UK tax resident corporate entities and that any joint venture vehicle will also be UK tax resident. The following Practice Notes give further detail on the UK tax issues signposted in this checklist and highlighted in this checklist as follows:
The tax consequences of contractual joint ventures
The tax consequences of establishing a joint venture partnership
The tax consequences of operating and terminating a joint venture partnership
The tax consequences of establishing a joint venture company
The tax consequences of operating and terminating a joint venture company
The tax consequences of international joint ventures
The transfer pricing and joint ventures
The tax influences on choice of joint venture vehicle
Question for joint venture counterparty
Potential tax issue
Answer/notes
What is the legal form of the counterparty? This will influence the possible overall structure of the joint venture and any resulting UK tax consequences, including group tax charges...
Tax
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