Finding a partnership’s trade or business after GCH Corporation Ltd

The terms ‘trade’ and ‘business’ recur across the tax system in a myriad of contexts and are often closely linked. The recent case of GCH Corporation Ltd (TC9317) provides an unusual but instructive example of how these terms might be understood and applied in practice and importantly how they may mean different things for tax purposes.

Background

Greg Hutchings was a former executive at the engineering firm Tomkins plc. This allowed him to acquire a large portfolio of shares through GCH Corporation Ltd (the company) and three family trusts of which Mr Hutchings was trustee.

Ahead of a proposed takeover of Tomkins Mr Hutchings took advice about how to mitigate the tax on the sale. He was advised to incorporate a limited liability partnership involving the company and trusts called GCH Active LLP (the LLP). It was set up in 2010. Mr Hutchings stated that...