Odey Asset Management and HFFX cases

In two separate cases the FTT considered the tax effects of schemes under which asset management limited liability partnerships deferred the entitlement of individual members to part of their share of the profits so that they would receive those shares over two or three years dependant on meeting certain conditions.

In Odey Asset Management LLP and others v HMRC [2021] UKFTT 31 (TC) (4 February 2021) a share of the profit was allocated to each member and then paid to a corporate partner (PSCL) set up specifically for the purpose. PCSL on a discretionary basis then contributed each of the individual profit shares to the LLP as ‘special capital’ on basis that the LLP would invest it in the fund which the relevant member managed. The special capital would then be reallocated to the member over a period of two or three years when the...