In BCM Cayman LP and BlueCrest Capital Management Cayman Ltd v HMRC, the Court of Appeal upheld the decision of the Upper Tribunal, concluding, first, that a corporate general partner was taxable on profits it received through a tiered partnership structure, even though it was bound to pass on those profits to a different partner. This was because (applying the Ramsay principle) it had retained – in reality – a beneficial interest in those profits. The general partner would, after passing those profits on, eventually receive substantially the same funds through a series of pre-ordained steps. This was the same conclusion, but by different reasoning, reached by the Upper Tribunal. Second, interest paid by a non-UK company is non-deductible for UK tax purposes where the borrowing was for the purposes of investing in a UK partnership, rather than for the purpose of the UK partnership’s trade.
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In BCM Cayman LP and BlueCrest Capital Management Cayman Ltd v HMRC, the Court of Appeal upheld the decision of the Upper Tribunal, concluding, first, that a corporate general partner was taxable on profits it received through a tiered partnership structure, even though it was bound to pass on those profits to a different partner. This was because (applying the Ramsay principle) it had retained – in reality – a beneficial interest in those profits. The general partner would, after passing those profits on, eventually receive substantially the same funds through a series of pre-ordained steps. This was the same conclusion, but by different reasoning, reached by the Upper Tribunal. Second, interest paid by a non-UK company is non-deductible for UK tax purposes where the borrowing was for the purposes of investing in a UK partnership, rather than for the purpose of the UK partnership’s trade.
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