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If a partner leaves a partnership for how long does his liability to that partnership remain? If a VAT fraud (for example) was discovered years later, would HMRC be able to claim the former partner was a party to the fraud and be liable to pay outstanding debts incurred due to the fraud?
Yes, a partner will be liable for the debts and liabilities incurred whilst he / she was a partner. Normally, when a partner leaves, all creditors are notified and any creditor who demands payment will be paid. But again normally the continuing partners assume the liability for the debt and the firm will continue. Sometimes a new partner will come in at the same time the retiring partner leaves. That new partner will assume the liabilities – called a contract of novation – and the old partner will be released.
But in the situation you have described the old VAT cheating partner would continue to be liable for debts and liabilities incurred by the firm whilst he / she was still a partner
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