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)

The appellants are not taxable on sums allocated to the corporate member (PSCL) in the year of allocation. However, they are taxable on sums received upon reallocation of special capital in the year of receipt under s 687 ITTOIA 2005 (miscellaneous income). They are not taxable under ss 773-778 ITA 2007. Certain amendments and discovery assessments by HMRC were held invalid.

Citation
[2021] UKFTT 31 (TC)
Parties
Appellants: Odey Asset Management LLP, Feras Al-Chalabi, Ralph Beckett, Timothy Bond, Roberto Cervesi, Rajesh Chaudhary, David Fletcher, James Grimston, James Hanbury, Bruce Hubbard, Benjamin Lambert, Orlando Montagu, Timothy Pearey, Michele Ragazzi, Massey Roborough, Andrew Sandler, David Stewart, Julian Wolfson; 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 Judgment
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

Case Brief

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Parties

Odey Asset Management LLP, Feras Al-Chalabi, Ralph Beckett, Timothy Bond, Roberto Cervesi, Rajesh Chaudhary, David Fletcher, James Grimston, James Hanbury, Bruce Hubbard, Benjamin Lambert, Orlando Montagu, Timothy Pearey, Michele Ragazzi, Massey Roborough, Andrew Sandler, David Stewart, Julian Wolfson

Appellants

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

Respondents

Procedural Posture

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

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 or ss 773-778 ITA 2007
  3. 3 Whether HMRC's amendments and discovery assessments were validly made under s 29 and 30B TMA

Ratio Decidendi

The appellants are not taxable on sums allocated to the corporate member (PSCL) in the year of allocation. However, they are taxable on sums received upon reallocation of special capital in the year of receipt under s 687 ITTOIA 2005 (miscellaneous income). They are not taxable under ss 773-778 ITA 2007. Certain amendments and discovery assessments by HMRC were held 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