(1)The Commissioners for HM Revenue and Customs v Bluecrest Capital Management LP and others and (2) Andrew Dodd and others v The Commissioners for HM Revenue and Customs [2022] UKUT 00200 (TCC)
| Jurisdiction | UK Non-devolved |
| Judge | Upper Tribunal Judge Timothy Herrington,Mr Justice Leech |
| Neutral Citation | [2022] UKUT 00200 (TCC) |
| Subject Matter | 22 July 2022 |
| Court | Upper Tribunal (Tax and Chancery Chamber) |
| Published date | 02 August 2022 |
UT Neutral citation number: [2022] UKUT 00200 (TCC)
UT/2020/000384
UT/2020/00378, UT/2020/000380
UT/2020/000382, UT/2020/000381
UT/2020/000383
Upper Tribunal
(Tax and Chancery Chamber) Hearing Venue: The Royal Court of Justice,
Rolls Building, Fetter Lane, London
Heard on: 16- 20 May 2022
Judgement date: 22 July 2022
Before:
MR JUSTICE LEECH
UPPER TRIBUNAL JUDGE TIMOTHY HERRINGTON
Between
THE COMMISSIONERS FOR HER MAJESTY’S REVENUE AND CUSTOMS
Appellants
and
(1) BLUECREST CAPITAL MANAGEMENT LP
(2) BLUECREST CAPITAL MANAGEMENT LLP
(3) BLUECREST CAPITAL MANAGEMENT (UK) LLP Respondents
and
(1) ANDREW DODD
(2) LEDA BRAGA
(3) SIMON DANNATT
(4) MICHAEL EDWARD PLATT
(5) JONATHAN WARD
Appellants
and
2
THE COMMISSIONERS FOR HER MAJESTY’S
REVENUE AND CUSTOMS
Respondents
Representation:
For HMRC: Rupert Baldry QC and Thomas Chacko, Counsel, instructed by the General Counsel and
Solicitor to HM Revenue and Customs
For the Respondents in UT/2020/000384 and the Appellants in UT/2020/00378, UT/2020/000380,
UT/2020/000382, UT/2020/000381 and UT/2020/000383: Malcolm Gammie QC and Michael
d’Arcy, Counsel, instructed by Slaughter and May.
3
DECISION
I. Introduction
This decision relates to appeals brought against findings made by the First-tier Tribunal (“FTT”)
in its decision (the “Decision”) released on 17 July 2020. In particular, this decision deals with the
following matters:
(1) HMRC appeal against the FTT’s decision to allow the appeals of BlueCrest Capital
Management LP (“BCM LP”), BlueCrest Capital Management LLP (“BCM LLP”) and
BlueCrest Capital Management (UK) LLP (“BCM UK LLP”) (together the “Partnership”)
against amendments to the Partnership’s tax returns made by various closure notices issued
between 25 May 2017 and 25 January 2019. In those closure notices HMRC challenged the
Partnership’s tax treatment of profit allocations made pursuant to the Partner Incentivisation
Plan (“PIP”) operated by the Partnership (the “PIP Appeals”).
(2) Mr Andrew Dodd, Ms Leda Braga, Mr Simon Dannatt, Mr Michael Platt and Mr Jonathan
Ward, who were all individual partners in the Partnership, (the “IP Appellants”) appeal against
the FTT’s decision to dismiss their appeals against amendments to the IP Appellants’ tax returns
made by various closure notices issued in August 2018. In those closure notices HMRC asserted
that the IP Appellants would be liable to income tax in respect of receipts under the PIP either
pursuant to sections 687 to 689 of the Income Tax (Trading and Other Income) Act 2005
(“ITTOIA 2005”) or section 776 of the Income Tax Act 2007 (“ITA 2007”) in the event that
the PIP Appeals were determined in the Partnerships’ favour (the “IP Appeals”).
(3) HMRC apply to strike out certain paragraphs of the IP Appellants’ Grounds of Appeal or,
alternatively, apply for a direction that the IP Appellants require permission to appeal in the IP
Appeals (the “Strike-Out Application”). They do so on the basis that the Upper Tribunal has
no jurisdiction to hear them or that the IP Appellants require permission to appeal and have not
sought and obtained it. The IP Appellants resist the application on the basis that they do not
require permission but, if they do, they apply for permission to appeal (the “Permission
Application”). We refer to the Strike-Out Application and the Permission Application together
as the “Procedural Applications”.
A. The PIP Appeals
We defined the term “Partnership” above, and use it in this decision, to refer collectively to the
various entities which have operated the BlueCrest alternative asset management business during the
years which are relevant to the PIP Appeals. Those appeals concern the proper taxation of the PIP
(which was described as a mechanism to facilitate the retention and incentivisation of partners in the
Partnerships). The PIP provided for a discretionary award of “Special Capital” to be made to an
individual partner if he or she remained a partner and had not engaged in behaviour that was, broadly
speaking, detrimental or prejudicial to the Partnership’s business. If a partner complied with the
qualification requirements, the PIP provided that partners were eligible for an award but had no right
to receive it. In particular:
(1) Each year individual partners had historically received performance related profit shares in the
Partnership which involved an element of discretion on the part of management.
(2) A new corporate partner (“the Corporate Partner”) was introduced into the Partnership to
facilitate the PIP. The Corporate Partner was entitled to be considered for a discretionary
allocation of the profits of the Partnership.
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