Did a partnership exist?

The taxpayer (RC) and his partner owned a property which they wanted to develop. He claimed that before development work was started he and his wife created a development partnership and that the property was appropriated to the partnership’s trading stock. Money was borrowed against the value of the property. Mr and Mrs C granted SCP a company which they owned an option to acquire the property for £830 000 its undeveloped market value and the property was acquired by the company with the consideration being taken to loan account. The property was subsequently disposed of by the company.

The intention of the planning was to defer the gain until the property was sold by the company. This was to be achieved first by a TGCA 1992 s 161 election to defer the gain on appropriation to stock and then under ITTOIA 2005 ...