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Treatment of partnership profits distributed to traders

11 February 2019
Issue: 4683 / Categories: Tax cases , Business
CRC v Investec Asset Finance plc and Investec Bank plc, Upper Tribunal (Tax and Chancery Chamber), 19 December 2018
Investec acquired an interest in a partnership that was entitled to the right to receive lease payments. It became a partner in that partnership with a view to realising the receivables: the partnership could then make distributions to Investec. 

HMRC had disallowed expenditure claimed by Investec in relation to its acquisition of the partnership interests.

In April 2018 the Upper Tribunal decided some preliminary issues on the acquisition of leasing partnerships by Investec. To recap it found:

  • Investec conducted two trades; 
  • FA 1998 s 42 required the profits of a trade to be computed in accordance with generally accepted accounting practice (GAAP) ‘subject to any adjustment required or authorised by law’; and 
  • TA 1988 s 114 required the profits and losses of a trade carried on by a partnership to be computed ‘as if the partnership were a company’.

The issue was how FA 1998 s 42 TA...

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