TC09613 - [2025] UKFTT 00989 (TC)

Fecha: 10-Jun-2025

The LLP’s Accounts

The LLP’s Accounts

29.

We spent some time looking at the LLP’s accounts for a number of periods and the post-hearing submissions from the parties comprised Mr Cannon’s answers to a series of questions we put to him on those accounts and HMRC’s observations on those answers. So far as the LLP’s accounts are concerned, we note the following:

(1)

The version of the accounts for the period 1/9/09-28/2/10 finally approved by Mr Burley (although only labelled “draft” and different from the version of the accounts in the hearing bundle, which are a superseded draft) was emailed to the Tribunal and HMRC during the hearing. In this version, the Florida properties are introduced at their original, higher value and the profit and loss account reflects as a loss the write down in value to the £419,755 figure in the balance sheet at 28 February 2010. The accounts for the following period, ended 28 February 2011 (which were in the hearing bundle), show the loss in value of £952,804 as a cost of sales in the comparative column.

(2)

Mr Burley was credited by the LLP with the value of the asset he introduced (valued professionally at £1.7m) and debited with the film partnership income (£342,780 in 2010/11) each year. Mr Cannon says that within the Partnerships Mr Burley (acting, Mr Cannon says, as nominee for the LLP) was credited with the income to which he was entitled from the films, but he was then debited in his personal capacity with the same figure as this amount was used to pay off Mr Burley’s personal liability to the banks. These two transactions were then reflected in the LLP accounts as a credit to other operating income and a debit to Mr Burley (both of £342,780 in 2010/11). Mr Cannon says that this is the explanation for the comment in an email which came before the Tribunal during the hearing, that Mr Burley was debited with the film profit share.

(3)

When Mr Burley transferred the interests in the Partnerships to the LLP, the LLP recognised an asset (valued at £1.7m). It did not recognise a liability because this remained a personal liability of Mr Burley’s. Mr Cannon says that this is consistent with the LLP accounting for the £1.7 million figure as a credit to Mr Burley’s capital account; if the LLP had effectively “paid for” the rights by assuming a liability, this would have had to have been deducted in the accounts from the value shown as being introduced into the LLP by Mr Burley. In other words, Mr Cannon says, Mr Burley conferred a £1.7 million benefit on the LLP and in return received a credit to his capital account with the LLP, without at the same time loading it with any other obligations.

(4)

Over the course of his membership of the LLP, Mr Burley’s capital account was overdrawn. The accounts show him withdrawing the £1.7m credit created when he contributed the interests in the Partnerships (see (3) above).