Walewski v Revenue & Customs (PROCEDURE : Other) [2020] UKFTT 58 (TC) (30 January 2020)

Walewski v Revenue & Customs (PROCEDURE : Other) [2020] UKFTT 58 (TC) (30 January 2020)

The Tribunal found that Mr Walewski's activities for W Ltd, AAM, and AF were fungible and inseparable; there was no evidence of W Ltd earning the profits independently. The allocation of profits to W Ltd was attributable to Mr Walewski's power to enjoy, satisfying the conditions for reallocation under s 850C ITTOIA 2005. Capital contributions and services by W Ltd did not justify the profit allocation. The appeal was dismissed.

Citation
[2020] UKFTT 58
Parties
Appellant: Nicholas Walewski; Respondents: The Commissioners for Her Majesty’s Revenue and Customs
Jurisdiction
United Kingdom
Judgment Date
30 January 2020
Procedural Posture
Tax Appeal / First Tier Tribunal (tax) Substantive Decision
Outcome
Appeal dismissed
Legal Topics
Mixed Partnership Rules, Income Tax, Profit Allocation, Anti Avoidance, Partnership Taxation
Tax Law Mixed Partnership Rules Income Tax Profit Allocation Anti Avoidance Partnership Taxation

Case Brief

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Parties

Nicholas Walewski

Appellant

The Commissioners for Her Majesty’s Revenue and Customs

Respondents

Procedural Posture

Tax Appeal / First Tier Tribunal (tax) Substantive Decision

Legal Issues

  1. 1 Whether profits allocated to Walewski Limited (W Ltd) should be re-allocated to Mr Walewski under the mixed partnership rules (s 850C ITTOIA 2005)
  2. 2 Whether W Ltd earned the profits or they are attributable to Mr Walewski's power to enjoy
  3. 3 Whether capital contributions and services justify profit allocation to W Ltd

Ratio Decidendi

The Tribunal found that Mr Walewski's activities for W Ltd, AAM, and AF were fungible and inseparable; there was no evidence of W Ltd earning the profits independently. The allocation of profits to W Ltd was attributable to Mr Walewski's power to enjoy, satisfying the conditions for reallocation under s 850C ITTOIA 2005. Capital contributions and services by W Ltd did not justify the profit allocation. The appeal was dismissed.

Court Disposition

Appeal dismissed

Orders

  • Profits allocated to W Ltd for the 2014-15 tax year are to be re-allocated to Mr Walewski under s 850C ITTOIA 2005.
  • No time apportionment or alternative allocation basis accepted.