Tribunal Rules Multiple Entities Can Form Single Commercial Undertaking
UKPulse Money Desk
A recent First-tier Tribunal decision has clarified that a Limited Liability Partnership (LLP) and a connected limited company can genuinely form part of one larger commercial undertaking.
- The First-tier Tribunal ruled in Jody Scheckter v HMRC [2026] UKFTT 1280 (TC) that a "larger trading undertaking" can include more than one legal entity.
- The Tribunal found that the LLP and company in the case were managed as a single enterprise with integrated departments and a common objective.
- The decision does not mean that transactions or profit allocations between entities are automatically respected for tax purposes, as Mr Scheckter's appeal was lost on other grounds.
A new First-tier Tribunal decision has determined that an LLP and a connected limited company can be considered part of a single commercial undertaking, even if they are separate legal entities. The ruling in Jody Scheckter v HMRC [2026] UKFTT 1280 (TC) addressed whether a "larger trading undertaking" could comprise more than one legal person.
The Tribunal concluded that the statutory expression "larger trading undertaking" is capable of including multiple legal persons in appropriate circumstances. In the Scheckter case, the LLP and company were found to operate as a single enterprise with integrated departments, a common objective, and shared assets and costs.
However, the judgment also included a warning regarding commercial dealings between connected entities. Mr Scheckter lost his appeal because the LLP, which owned a valuable brand, did not charge the connected company for its use. The Tribunal deemed this commercially unacceptable, stating that an entity allowing another to use its most valuable asset without charge was not acting commercially.
Why this matters: This decision may be relevant for landlords whose arrangements fall within HMRC’s Spotlight 63, particularly where HMRC might attempt to characterise the mere presence of several legal entities as evidence of an artificial underlying property operation.
What this means for you: If you are a landlord with mixed-member Hybrid LLP arrangements, this judgment could influence how your property operation is analysed, particularly regarding whether multiple legal entities can be seen as a single commercial undertaking. However, it also highlights the importance of ensuring all inter-entity transactions, such as brand usage, are conducted on a commercial basis.