The mixed membership partnership rules counter the diversion of profits from individual partners to corporate partners to reduce or defer overall taxes. When the conditions are met, profits are reallocated for tax purposes from the company to the relevant individual. HMRC is targeting such partnerships for enquiry. In Walewski, the first reported case brought under the rules, the tribunal found in HMRC’s favour. That case provides helpful insight on both HMRC’s approach to mixed membership partnership enquiries and how the tribunal will determine appeals.
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The mixed membership partnership rules counter the diversion of profits from individual partners to corporate partners to reduce or defer overall taxes. When the conditions are met, profits are reallocated for tax purposes from the company to the relevant individual. HMRC is targeting such partnerships for enquiry. In Walewski, the first reported case brought under the rules, the tribunal found in HMRC’s favour. That case provides helpful insight on both HMRC’s approach to mixed membership partnership enquiries and how the tribunal will determine appeals.
If you are not a subscriber, subscribe now to read this content.
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