D Brown & Anor v The Commissioners for HMRC

Decision date: 22 October 2026

Neutral citation: [2026] UKFTT 1484 (TC)

Overall AI summary confidence: high

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Short overview

This short overview is intended to summarise the case, issues and outcome so far as they are supported by the judgment.

AI confidence in this short overview: high

This appeal concerned HMRC’s closure notice reducing reported 2015/16 partnership profits of £146,013 to nil on the basis that the income arose from Mr Brown’s employment with Subsea 7 and was contractually payable to him personally. The First-tier Tribunal found the payments were earned under Mr Brown’s minimum-days employment contract while he was an employee and did not constitute partnership income. The Tribunal rejected the appellants’ arguments that ITTOIA 2005 s.15 or related authorities converted those employment earnings into partnership income or created a trade owned by the partnership. The appeal was dismissed and HMRC’s amendment upheld.

Ratio decidendi

This summary is intended to identify the ratio decidendi, meaning the legal reasons for deciding and the binding part of the decision.

AI confidence in this ratio decidendi summary: high

Income arising under a contract between an employer and an individual employee belongs to that individual unless there is evidence of transfer of contractual rights or some other legal basis for attributing it to a partnership; statutory deeming under ITTOIA 2005 s.15 (treating performance of employment duties as carrying on a trade for certain tax purposes) does not change the source of the income or convert qualifying employment earnings into partnership income.

Obiter dicta

This summary is intended to identify obiter dicta, meaning observations made by the way that were not necessary to deciding the case and are not binding.

AI confidence in this obiter dicta summary: medium

The Tribunal noted that the mere existence of a registered partnership or prior partnership filings, without evidence such as a contract between the employer and the partnership, assignment/novation of rights, a partnership agreement dealing with the matter, or supporting witness evidence, is insufficient to treat an employee’s contractually earned remuneration as partnership income. The judgment treated authorities cited (Puttnam, Green, Corrigall, Lowe and Fowler) as supporting the view that s.15 does not effect such a conversion.

Warning

- The chunk contains extensive repetition of the same findings and reasoning.

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