Muller UK and Ireland Group LLP and others (Appellants) v Commissioners for His Majesty's Revenue and Customs (Respondent)

Permission to Appeal application lodged

Case summary
Permission to Appeal
Previous proceedings

Case summary

Case ID

UKSC/2026/0059

Parties

Appellant(s)

Muller UK and Ireland Group LLP & Others

Respondent(s)

His Majesty's Revenue & Customs

Issue

When applying the statutory fiction in section 1259 of the Corporation Tax Act 2009 to calculate the taxable profits of a limited liability partnership whose members are corporations, is the court required to import into that calculation the real-world ownership and control characteristics of the partnership? If the answer to the question above is “no”, does the extended definition of “related party” introduced by the Finance Act 2016 apply for accounting periods commencing on or after 25 November 2015, in circumstances where the Material Assets were acquired by the partnership prior to the effective date of those amendments?

Facts

The second, third and fourth appellants are members of the Muller multinational corporate group which trades in dairy products. Each of them was incorporated, and is resident for tax purposes, in the UK. Together, they may be referred to as “the Corporate Members” since they own (in varying percentages) all the membership units in the first appellant (“the LLP”). The first appellant is a limited liability partnership incorporated by the Corporate Members on 7 May 2013 under the Limited Liability Partnerships Act 2000. On 1 July 2013, the Corporate Members transferred their trade (including intellectual property) and goodwill to the LLP in return for membership units in the LLP. It is common ground that the assets transferred fall within the definition of “intangible fixed assets” (or “IFAs”) in section 712 of the Corporation Tax Act 2009 (“CTA 2009”) and goodwill is treated in the same way under section 715 CTA 2009. Collectively, the assets transferred may be called “the Material Assets”. The Material Assets were recorded at their fair value in the LLP’s accounts and then amortised over five years. This appeal concerns the approach to computing the profits of the LLP to be included in each Corporate Member’s tax return for the accounting periods ended 31 December 2013, 2014, 2015, 2016, 2017 and 2018. In each of those periods, a deduction was taken for the amortisation of the Material Assets. Importantly, the provisions governing intangible assets in Part 8 CTA 2009 entitle companies to claim debits on the amortised depreciation of intangible assets which have been acquired. However, that entitlement is only available if the acquirer is not a “related party”. The deduction for amortisation of the Material Assets was denied by His Majesty’s Revenue and Customs (“HMRC”) on the basis that the appellants were related parties. In its decision published in February 2023, the First-tier Tribunal, agreeing with HMRC, rejected the appellants’ case that they were not related parties. The appellants’ subsequent appeals to the Upper Tribunal (“UT”), and the Court of Appeal (“CA”), were also dismissed. The appellants now seek permission to appeal to the Supreme Court.