Extent of double taxation in a business trading partnership interests

Wed 06 Feb 2019

The second Upper Tribunal (UT) decision in the Investec partnership trading case has held that in a case where separate accounts were prepared for a partnership and a business trading interests in that partnership, a capital distribution from a partnership could not be ignored when computing the taxable profits of a business trading in partnership interests. In other words there was no double taxation in taking account of the partnership capital distribution when working out the taxable profit on realising the partnership interest despite that distribution arising from previously taxed partnership profits. The case was remitted to the First tier Tribunal for further findings where the partnership profits and the profits of trading partnership interests, were included in the same set of accounts. The first decision of the UT was covered here.

It is an example of the need to consider the different types of business activity carried on for tax purposes, particularly where partnership interests are involved.

For a further discussion of the tax issues affecting partnerships, please get in touch with a member of the Mazars Corporate tax team.

Chris Lallemand Senior Tax Manager

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