In HFFX LLP and others v HMRC [2023] UKUT 73 (TCC) (21 March 2023) the Upper Tribunal (UT) considered a scheme under which individual members of the LLP received discretionary deferred profits via a corporate LLP member ruling that the amounts in question were taxable as miscellaneous income under ITTOIA 2005 s 687.
The individual appellants were members of the appellant LLP and were involved in coding and developing automated foreign exchange trading. The LLP deployed the automated trading to make substantial profits. The LLP entered into a scheme to defer the entitlement of the individuals to part of their profit shares. Under the scheme a share of the profit was allocated and paid to a corporate partner (GSAM) which then had discretion to allocate sums as 'special capital' to the individual members taking account of the managing member’s recommendations.
The appellants argued that the individual members were...
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