Judgment summary
This decision follows an earlier decision in principle, [2026] UKFTT 696 (TC) (the "Decision"), in which the Tribunal allowed the appeals of five partnerships in part. The appeals relating to the Peakviewing transactions were upheld in full, and the Tribunal found that the T3 Equity component of each T3 Advance relating to non-Peakviewing transactions was wholly and exclusively incurred for trade purposes (paras 1-2).
The Tribunal had left it to the parties to agree the resulting amendments to the closure notices, failing which the Tribunal would determine them (para 2(3), para 219 of the Decision). Take 3.14 TV Partnership subsequently reached agreement with the Respondents and its appeals are finally determined, so it is not the subject of this decision (para 4).
The remaining four partnerships, Take 3.9, Take 3.10, Take 3.12 and Take 3.13, could not reach agreement with the Respondents, largely because Mr Rawlinson, who represented the Appellants, lacked authority to agree figures on their behalf (para 5). The parties asked the Tribunal to determine the figures on the papers, based on written submissions, without a further hearing (para 6).
The Tribunal accepted the Respondents' proposed method of apportionment for the 2001/2002 tax year, but devised a modified methodology for the 2002/2003 tax year to better reflect the mix of gross income and gross expenditure in that year, producing revised figures (Tables 5 to 7).
Background
The appeals arose from closure notices issued to five TV partnerships. In the earlier Decision dated 12 May 2026, [2026] UKFTT 696 (TC), the Tribunal held that appeals relating to the Peakviewing transactions should be upheld, and that, for non-Peakviewing transactions, the T3 Equity component of each T3 Advance was wholly and exclusively incurred for the purposes of each Appellant's trade, entitling relief for that component (para 2).
The Tribunal expected the parties to be able to agree the precise figures implementing these conclusions, since the Peakviewing-related figures were those in the Appellants' partnership returns and the non-Peakviewing components should be readily identifiable (para 3).
Take 3.14 TV Partnership subsequently agreed figures with the Respondents and its appeals are finally determined (para 4). The appeals of Take 3.11 TV Partnership had already been finally determined and were not relevant to the Decision (para 2(1)).
Core dispute
The dispute concerned how to apportion the overall profit or loss shown in each remaining Appellant's partnership return for the 2001/2002 and 2002/2003 tax years, insofar as it related to non-Peakviewing transactions, between a trading profit or loss (attributable to the T3 Equity component of each T3 Advance) and a non-trading profit or loss (attributable to the T3 Debt component) (paras 9-11).
The Respondents proposed a method based on the proportion of expenditure on non-Peakviewing transactions funded by partners, as shown in Production Schedules in the hearing bundle (paras 11-12). For the 2002/2003 tax year, because the non-Peakviewing transactions produced both income (from ICTC and "Inquisition") and expenditure (on "Big Kiss"), the Respondents applied a three-stage calculation based on income generated by each transaction (para 12).
Mr Rawlinson, representing the Appellants but without authority to agree figures, raised concerns about discrepancies between the Production Schedules and the amended partnership returns, and suggested that other calculation methods might exist, without proposing a concrete alternative (paras 15-17).
Court findings
The Tribunal declined to reject the Respondents' proposed method based on Mr Rawlinson's submissions, finding that it was too late to revisit the agreed figures in the table at paragraph 5 of the Decision, and that his alternative suggestion was not concrete or detailed (paras 18-19).
For the 2001/2002 tax year, the Tribunal agreed with the Respondents' method, since no income was received in respect of non-Peakviewing transactions in that year, making a straightforward apportionment by reference to partner-funded expenditure appropriate (para 20).
For the 2002/2003 tax year, the Tribunal considered the Respondents' method less convincing because it failed to take account of the extent to which expenditure on "Big Kiss" was partner-funded (paras 21-22). The Tribunal set out an alternative, fairer method that broke the net profit into its gross income (ICTC and "Inquisition") and gross expenditure ("Big Kiss") components, apportioning each separately between partner-funded and debt-funded amounts using the Production Schedules, and then deriving the trading portion as "A minus B" (paras 23-24).
The Tribunal acknowledged two difficulties: discrepancies between the partnership returns and the Production Schedules that could not now be explained, and the absence of any breakdown between non-Peakviewing transactions in the partnership returns themselves, other than in the Production Schedules (paras 25-27). Despite these difficulties, the Tribunal considered its method a fairer template and applied it using the Production Schedule figures (para 28).
Outcome
The Tribunal determined that the trading profit or loss for each of the remaining four partnerships, Take 3.9, Take 3.10, Take 3.12 and Take 3.13, for the 2001/2002 and 2002/2003 tax years was as set out in Column 4 of Table 6, and that the balance was a non-trading profit or loss as set out in Column 2 of Table 7 (para 32).
The appeals of Take 3.14 TV Partnership had already been finally determined by agreement between the parties and were not addressed in this decision (para 4). The decision records that it contains full findings of fact and reasons, and that any dissatisfied party may apply for permission to appeal under Rule 39 of the Tribunal Procedure (First-tier Tribunal) (Tax Chamber) Rules 2009, within 56 days of the decision being sent (para 33).
Major issues / areas of contention
- Whether the Respondents' proposed apportionment method for the 2001/2002 tax year, based on the percentage of expenditure on non-Peakviewing transactions funded by partners, was appropriate.
- Whether that same method, applied to the 2002/2003 tax year, properly accounted for the fact that non-Peakviewing transactions in that year generated both gross income (ICTC and "Inquisition") and gross expenditure ("Big Kiss").
- Whether discrepancies between figures in the Production Schedules and the amended partnership returns undermined the proposed calculations.
- Whether Mr Rawlinson's submissions, made without authority to agree figures, provided a basis to reject the Respondents' proposed methodology.
- How to quantify, for each remaining Appellant partnership and tax year, the portion of profit or loss attributable to the T3 Equity component (trading) as against the T3 Debt component (non-trading) of each T3 Advance.