Odey Asset Management Llp v Revenue and Customs (INCOME TAX - tax effects of a partnership incentive plan) [2021] UKFTT 31 (TC) (4 February 2021)

Odey Asset Management Llp v Revenue and Customs (INCOME TAX - tax effects of a partnership incentive plan) [2021] UKFTT 31 (TC) (4 February 2021)

Members are not taxable on deferred profit shares in the year of allocation to PSCL, but are taxable in the year of receipt under s 687 ITTOIA 2005; not under ss 773-778 ITA 2007. Certain amendments and discovery assessments were invalid.

Citation
[2021] UKFTT 31
Parties
Appellants: Odey Asset Management LLP and others; Respondents: The Commissioners for Her Majesty’s Revenue & Customs (HMRC)
Jurisdiction
United Kingdom
Judgment Date
04 February 2021
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal allowed in part
Legal Topics
Income Tax, Partnership Taxation, Remuneration Deferral, Discovery Assessments, Validity of Tax Amendments
Tax Law Income Tax Partnership Taxation Remuneration Deferral Discovery Assessments Validity of Tax Amendments

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Parties

Odey Asset Management LLP and others

Appellants

The Commissioners for Her Majesty’s Revenue & Customs (HMRC)

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax) Substantive Decision

Legal Issues

  1. 1 Whether individual members of Odey Asset Management LLP are taxable on sums allocated to a corporate member (PSCL) in the year of allocation
  2. 2 Whether members are taxable on sums received on reallocation of special capital in the year of receipt under s 687 ITTOIA 2005
  3. 3 Whether such sums are taxable under ss 773 to 778 ITA 2007 (sales of occupational income)

Ratio Decidendi

Members are not taxable on deferred profit shares in the year of allocation to PSCL, but are taxable in the year of receipt under s 687 ITTOIA 2005; not under ss 773-778 ITA 2007. Certain amendments and discovery assessments were invalid.

Court Disposition

Appeal allowed in part

Orders

  • Appellants not taxable on sums allocated to PSCL in year of allocation
  • Appellants taxable on sums received on reallocation of special capital in year of receipt under s 687 ITTOIA 2005