Tax Case Summary: Drilling Global Consultant LLP v HMRC [2014]

Release Date: 11 September 2014


Whether an LLP, whose members are an individual and a limited company is a qualifying person entitled to claim the annual investment allowance (AIA)  within the meaning of s38A(3)of CAA2001.

It was held by the First-Tier Tax Tribunal that a mixed LLP, is not a qualifying person and therefore not entitled to an AIA as not all the members in the partnership are individuals.


Drilling Global Consultant LLP incurred expenditure on upgrading an Aircraft’s navigation system. They claimed 100% AIA on this expenditure in their tax return for year ended 5 April 2011.

HMRC opened an enquiry into the partnerships tax return stating the claim for the AIA on the expenditure would not be accepted. After no agreement was reached, Drilling Global Consultant LLP lodged a Notice of Appeal.

Drilling Global Consultant LLP argued that it should be treated as a company for the purposes of determining its profits chargeable to tax and is therefore a qualifying person for AIA.

HMRC argued that a mixed partnership is not a qualifying person, not all members of the partnerships are individuals.

It was held that an LLP whose members consist of an individual and an unlimited company, is not a qualifying person within the meaning of s38A (3)(c) of CAA2001. So are not entitled to an annual investment allowance.

What this means

It is essential to consider the membership structure and whether AIA’s are applicable. Similar applies for considering whether Land Remediation Relief (LRR) is applicable.

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