Burley v Revenue and Customs (INCOME TAX - purported assignment of interests in partnership profits - whether purported assignor remained entitled to those profits) [2025] UKFTT 989 (TC) (14 August 2025)

Burley v Revenue and Customs (INCOME TAX - purported assignment of interests in partnership profits - whether purported assignor remained entitled to those profits) [2025] UKFTT 989 (TC) (14 August 2025)

Even if the assignment of partnership profit interests by Mr Burley to the LLP was effective in equity, the commercial reality was that the profits continued to be used to discharge Mr Burley's personal loan obligations. Applying a purposive construction of section 8 ITTOIA 2005 and relevant case law, Mr Burley remained the person entitled to the profits and thus liable to income tax on them. The assignment did not divest him of entitlement for tax purposes.

Citation
[2025] UKFTT 989 (TC)
Parties
Appellant: Craig William Burley; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
14 August 2025
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax) Substantive Judgment
Outcome
Appeal dismissed
Legal Topics
Assignment of Partnership Profits, Income Tax Liability, Equitable Assignment, Tax Avoidance, Section 8 ITTOIA 2005
Tax Law Partnership Law Assignment of Partnership Profits Income Tax Liability Equitable Assignment Tax Avoidance Section 8 ITTOIA 2005

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Parties

Craig William Burley

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

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

Legal Issues

  1. 1 Whether the purported assignment of partnership profit interests by Mr Burley to an LLP was effective to divest him of entitlement for income tax purposes
  2. 2 Whether, even if the assignment was effective in equity, Mr Burley remained taxable on the profits under section 8 ITTOIA 2005

Ratio Decidendi

Even if the assignment of partnership profit interests by Mr Burley to the LLP was effective in equity, the commercial reality was that the profits continued to be used to discharge Mr Burley's personal loan obligations. Applying a purposive construction of section 8 ITTOIA 2005 and relevant case law, Mr Burley remained the person entitled to the profits and thus liable to income tax on them. The assignment did not divest him of entitlement for tax purposes.

Court Disposition

Appeal dismissed

Orders

  • Mr Burley remains liable to income tax on the partnership profits as assessed in the closure notices.