Income from a Delaware company

The appellant a UK resident was a founding member of Sandpiper LLC a Delaware limited liability company.

The company was classified as a partnership for US tax purposes which meant that the partners were liable for tax rather than the partnership.

Between 1997 and 2003 the distributions he received from Sandpiper LLC were subjected to US federal income tax and state income tax. He therefore claimed double tax relief on those distributions in his relevant self assessment tax returns.

HMRC enquired into the taxpayer’s returns. They concluded that the company was not transparent: i.e. it was instead a corporate entity that had paid dividends and double tax relief was not due.

They subsequently issued discovery assessments in respect of the years 1997/98 to 1999/2000 and amended the returns for 2000/01 to 2003/04.

The First-tier Tribunal chose to concentrate on whether or...