The mixed membership partnership rules counter the diversion of profits from individual partners to corporate partners to reduce or defer overall taxes. When the conditions are met, profits are reallocated for tax purposes from the company to the relevant individual. HMRC is targeting such partnerships for enquiry. In Walewski, the first reported case brought under the rules, the tribunal found in HMRC’s favour. That case provides helpful insight on both HMRC’s approach to mixed membership partnership enquiries and how the tribunal will determine appeals.
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The mixed membership partnership rules counter the diversion of profits from individual partners to corporate partners to reduce or defer overall taxes. When the conditions are met, profits are reallocated for tax purposes from the company to the relevant individual. HMRC is targeting such partnerships for enquiry. In Walewski, the first reported case brought under the rules, the tribunal found in HMRC’s favour. That case provides helpful insight on both HMRC’s approach to mixed membership partnership enquiries and how the tribunal will determine appeals.
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
