Dividend decision

Were transactions claimed to produce losses trading ones?

The taxpayer a partnership registered in Jersey dealt in short-dated securities. A dispute arose about the treatment of a £60m dividend paid on 5 April 2006 to the partnership by H (a company incorporated in the Cayman Islands).

The partnership argued that although it had received the dividend it was the income of D (a company incorporated in the British Virgin Islands). This was because the right to receive it was sold by H to D without any sale of the shares to which the dividend related (TA 1988 s 730).

The matter proceeded to the First-tier Tribunal.

The tribunal first had to decide whether the partnership was carrying on a trade for the year to 5 April 2006. It decided the partnership was doing so because its activities were the same kind and carried on in the same...