Lack of risk

The Renaissance Club at Archerfield (RCA) LLP ran a golf course that made trading losses.

The partnership’s two members were Invest Archerfield LLC a Delaware limited company that had invested $8m to develop the course and the taxpayer company which claimed the losses.

HMRC refused the claim saying TA 1988 s 118ZC limited loss relief to nil because the taxpayer had made no contribution of capital to the build the golf course and would not be liable to contribute if the LLP were wound up.

The First-tier Tribunal (FTT) allowed the companies’ appeal to the extent that it concluded the taxpayer would have to make a contribution on winding up. All parties appealed.

The taxpayer claimed one-third of the $8m was credited to its capital account and that its business would be at risk if the LLP were wound up.

The Upper Tribunal said...