Odey Asset Management loses tax battle with HMRC over executive pay
Crispin Odey’s hedge fund Odey Asset Management has lost a tax battle with HMRC that could leave current and former executives on the hook for additional tax bills.
The firm and 17 executives have been embroiled in litigation with HMRC over a partnership pay plan than ran between tax years 2011-12 and 2016-16.
According to the Financial Times, which first reported the news, the scheme allowed profits that would have been paid to executives involved to be deferred for two to three years until certain targets were met.
Odey himself was not part of the scheme, but it did include high profile managers at the firm James Hanbury and Tim Bond.
A Financial Times source said the firm would appeal the decision. Odey AM declined to comment.
The plan placed executives into a special purpose vehicle called Partners Special Capital ltd. It then paid out shares to members two to three years later if they hit certain targets.
Judge Harriet Morgan ruled that there was an additional income tax liability as a result of the scheme.
However, she concluded scheme members were not subject to income tax in the tax year in which they were awarded the shares.
The plan was reportedy put in place because of pressure the executives felt from regulators, who were keen to move the financial services industry away from immediate cash bonuses in the wake of the global financial crisis.
HMRC later raised problems with the plan and said it was owed income tax.