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Clarity that’s worth its weight in gold
Key points
- In BlueCrest a partnership incentivisation plan (PIP) was introduced which had a genuine commercial purpose (to attract and retain the participating partners).
- The perceived fiscal advantage lay in the difference between the partner’s marginal rate of income tax on their prospective profit share (40%) and the rate of corporation tax payable by the corporate partner (28%).
- The issue at the heart of this case was the proper construction of ITTOIA 2005 s 850.
- HMRC argued there were two ways to tax the PIP: 1) viewing PIP arrangements as a whole (FTT and UT disagreed with this approach); and 2) viewing the awards once made as chargeable to income tax in the hands of the participating partners (FTT and UT agreed with this approach).
- The Court of Appeal held that the source for the awards was the exercise by the partner of its discretion: the...
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