We act for a large number of medical practices and are trying to establish whether clients need to register in the following scenarios:
A) a partner holds a share in a company (such as a GP provider federation company) on trust for all the other partners in his/her practice; and
B) a GP practice holds money in a separate practice bank account, on behalf of other practices in their primary care network being a joint venture to deliver GP primary care services
HMRC’s guidance (TRS23050) says that, “that "A partner holding property on behalf of the partnership does not… automatically result in an express trust that may be registerable on TRS. However, in some situations it may be declared (i.e. through a written deed) that property is being held on trust for the partnership. If so, this is an express trust which would be registerable on TRS."
As far as A) is concerned, do members think that “property” includes shares? TRSM2030 appears to relate to property in the form of land and buildings but can we assume that “property” includes shares?
An example given in respect of partnership assets is, *“*Nadia, Rosena and Lyn are partners in a farming partnership. They decide to purchase an item of machinery for the partnership using partnership funds. Nadia purchases the machinery in her name. The partners do not have any formal partnership agreement in place.
Under section 21 of the Partnership Act 1890, in the absence of any evidence to the contrary the machinery is deemed to be partnership property, without any express trust being created. There are therefore no TRS registration consequences.”
And…
“Guy, Yasmin and Esther are partners in a trading partnership. They decide to purchase an item of machinery for the partnership using partnership funds and Guy purchases the machinery in his name.
The partners had previously drawn up partnership agreement to protect their rights should the partnership dissolve at a later date. This agreement states that property purchased by Guy using partnership funds is to be held on trust for the partners in equal shares. As a result, the subsequent purchase of the machinery by Guy does create an express trust which would be registerable on TRS from the date of purchase, provided no other exclusions from registration apply.”
Would that also include shares where no formal deed is in place to deal with such a situation?
In terms of B) is this just a contractual joint venture where money is held by one party subject to the terms of a contract with another as opposed to an “express trust”? So for example the practices in the network are merely creditors of the practice holding their funds.
We are planning to get HMRC to opinion on this, but if any of you have any views, that would be very helpful. I’ll let you know what HMRC say when we get an answer from them.