Wallace v Revenue and Customs (INCOME TAX - partnerships - meaning of s.849(3) Income Tax (Trading and Other Income) Act 2005 - whether non-UK resident partner chargeable to income tax on their share of partnership profits derived from UK trading activities with non-UK counterparties) [2025] UKFTT 790 (TC) (25 June 2025)

Wallace v Revenue and Customs (INCOME TAX - partnerships - meaning of s.849(3) Income Tax (Trading and Other Income) Act 2005 - whether non-UK resident partner chargeable to income tax on their share of partnership profits derived from UK trading activities with non-UK counterparties) [2025] UKFTT 790 (TC) (25 June 2025)

Section 849(3) ITTOIA 2005 requires calculation of partnership profits as if the partnership were a non-UK resident individual, but the actual trade carried on by the partnership remains determinative. As the partnerships' trades were carried on wholly in the UK, the non-UK resident partner is taxable on their share of the whole profits, regardless of the source of the lessees.

Citation
[2025] UKFTT 790
Parties
Appellant: Mark Wallace; Respondents: The Commissioners for His Majesty's Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
25 June 2025
Procedural Posture
Income Tax Appeal / First Tier Tribunal (tax Chamber) Final Judgment
Outcome
Appeal dismissed
Legal Topics
Income Tax, Partnerships, Non UK Resident Taxation, Section 849(3) ITTOIA 2005, Territorial Scope of Taxation
Tax Law Income Tax Partnerships Non UK Resident Taxation Section 849(3) ITTOIA 2005 Territorial Scope of Taxation

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Parties

Mark Wallace

Appellant

The Commissioners for His Majesty's Revenue and Customs

Respondents

Procedural Posture

Income Tax Appeal / First Tier Tribunal (tax Chamber) Final Judgment

Legal Issues

  1. 1 Whether a non-UK resident partner is chargeable to UK income tax on their share of partnership profits derived from UK trading activities with non-UK counterparties under section 849(3) ITTOIA 2005.

Ratio Decidendi

Section 849(3) ITTOIA 2005 requires calculation of partnership profits as if the partnership were a non-UK resident individual, but the actual trade carried on by the partnership remains determinative. As the partnerships' trades were carried on wholly in the UK, the non-UK resident partner is taxable on their share of the whole profits, regardless of the source of the lessees.

Court Disposition

Appeal dismissed

Orders

  • Closure Notices upheld; Mr Wallace is liable to UK income tax on his share of the partnership profits for the relevant years.