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Income or profits?

06 October 2015
Issue: 4521 / Categories: Tax cases , Avoidance
R Huitson (TC4621)
The taxpayer was an electrical engineering consultant resident in the UK. In April 2001 he entered into an avoidance scheme marketed by a firm of Isle of Man tax consultants. Under the scheme the taxpayer became the settlor of an Isle of Man trust in which he also had an interest in possession. The trust became a partner in an Isle of Man partnership which entered into a contract with the taxpayer to provide his services. Under the contract he was entitled to an annual fee of £15 000 and a share of the partnership profits as a trust beneficiary.
Under the UK/Isle of Man double tax treaty the taxpayer would pay tax and National Insurance on the annual fee but nothing on the partnership profits.
As a result of a case involving...

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