First-tier Tribunal decision in Boston Consulting Group

The miscellaneous income rules are showing the same alarming qualities as Jack’s beanstalk. They have rapidly outgrown their application to partner’s discretionary rewards and now encompass quasi-equity interests. In achieving this feat HMRC has once again successfully deployed the tactics now familiar from the recent succession of partnership cases (BlueCrest [2024] STC 92 HFFX [2023] STC 678 and Odey (TC8018)). Although here procedural difficulties have made the victory on the substantive issues a pyrrhic one.

But that is not all. In only the second published decision ever on the mixed partnership rules the reasoning of the First-tier Tribunal (FTT) indicates a similar tendency may lurk within these rules too.

Professional advisers whether interested in the taxation of partnerships or not may wish to revisit their analysis of both sets of rules in the light of Boston Consulting Group LLP (TC9049).

Background

The Boston...