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 not commercially or physically separated. There was no evidence that W Ltd earned the profits independently; rather, the profits were attributable to Mr Walewski's power to enjoy. The conditions for re-allocation under s 850C ITTOIA 2005 were satisfied, and the profits should be re-allocated to Mr Walewski. Time apportionment and unallocated profits as capital contributions were rejected due to lack of evidence and statutory requirements.

Citation
[2020] UKFTT 58 (TC)
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 Chamber) 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

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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 Chamber) 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 if they are attributable to Mr Walewski's power to enjoy
  3. 3 Whether time apportionment or capital contributions affect the re-allocation

Ratio Decidendi

The Tribunal found that Mr Walewski's activities for W Ltd, AAM, and AF were fungible and not commercially or physically separated. There was no evidence that W Ltd earned the profits independently; rather, the profits were attributable to Mr Walewski's power to enjoy. The conditions for re-allocation under s 850C ITTOIA 2005 were satisfied, and the profits should be re-allocated to Mr Walewski. Time apportionment and unallocated profits as capital contributions were rejected due to lack of evidence and statutory requirements.

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 additional capital contribution deductions allowed beyond those accepted by HMRC.