Mixed result

Dealers’ partnership profits

The taxpayers were financial dealers in the Investec group. They participated in transactions designed so they could exit from leasing partnerships. They said they should be taxed on the net profits from their activities deducting the costs of purchasing the partnership interests from the rentals or the sale proceeds of the rentals received while they were the relevant partners.

HMRC said the relevant costs were non-deductible or the taxpayers should be taxed on the net profits in their respective sole financial trades as well as on the entire partnership profits.

The First-tier Tribunal gave a decision in principle. Both parties appealed.

The Upper Tribunal agreed with the First-tier Tribunal that the acquisition of partnership interests and making capital contributions were short-term recurrent transactions that had the character of trading. Investec’s expenditure was therefore revenue in nature. HMRC’s appeal on this was dismissed.

On the...