Summary 

The appellant was liable to tax under the ‘mixed partnership’ rules on allocations of profits to a company from two partnerships as the allocations exceeded an appropriate notional profit and the appellant had the power to enjoy the company’s profit share. 

Background 

In July 2005, the appellant set up an equity fund (a Luxembourg open-ended vehicle), which was managed by a limited liability partnership (LLP) (AAM) in the UK. Trade execution was carried out by another LLP (AF). 

The appellant was a partner in AAM and AF. He set up a company (W Ltd) in June 2006, which was a partner of both AAM and AF. The appellant was W Ltd’s only director. He became an employee of W Ltd on 1 April 2007. The shares in W Ltd were held