Nicholas Walewski v The Commissioners for HMRC

Nicholas Walewski v The Commissioners for HMRC

Section 850C ITTOIA permits the reallocation of profits from a corporate partner to an individual partner for the entire period of account if statutory conditions are met, regardless of the individual's partner status throughout, and the profit reallocation determined by the First-tier Tribunal was just and reasonable given the Appellant's control and power to enjoy all profits allocated to the corporate partner.

Parties
Appellant: Nicholas Walewski; Respondents: The Commissioners for Her Majesty’s Revenue & Customs
Jurisdiction
England and Wales
Judgment Date
15 June 2021
Procedural Posture
Tax Appeal / Upper Tribunal (tax and Chancery Chamber) Appeal From First Tier Tribunal
Outcome
Appeal dismissed
Legal Topics
Mixed Partnership Rules, Profit Allocation, Income Tax, Corporation Tax, Anti Avoidance Provisions
Tax Law Corporate Law Mixed Partnership Rules Profit Allocation Income Tax Corporation Tax Anti Avoidance Provisions

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Parties

Nicholas Walewski

Appellant

The Commissioners for Her Majesty’s Revenue & Customs

Respondents

Procedural Posture

Tax Appeal / Upper Tribunal (tax and Chancery Chamber) Appeal From First Tier Tribunal

Legal Issues

  1. 1 Whether section 850C ITTOIA permits reallocation of corporate partner's profits to individual partner for periods when individual was not a partner
  2. 2 Whether the 'just and reasonable' basis for profit reallocation was properly applied given the fungibility of the individual's services

Ratio Decidendi

Section 850C ITTOIA permits the reallocation of profits from a corporate partner to an individual partner for the entire period of account if statutory conditions are met, regardless of the individual's partner status throughout, and the profit reallocation determined by the First-tier Tribunal was just and reasonable given the Appellant's control and power to enjoy all profits allocated to the corporate partner.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed; the First-tier Tribunal's decision stands; no further consideration of the respondent’s notice is necessary.