Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.
LLP and connected company can form one larger trading undertaking, rules Tribunal
A new First-tier Tribunal decision, Jody Scheckter v HMRC [2026] UKFTT 1280 (TC), has found that an LLP and a connected limited company can genuinely form part of one larger commercial undertaking, despite being separate legal entities. The judgment has no direct connection to landlords or HMRC's Spotlight 63, but Property118 argues it deserves careful consideration by landlords whose arrangements fall within Spotlight 63 and Spotlight 63a.
What the case involved
The appellant was former Formula One world champion Jody Scheckter, who built an organic farming and food business around Laverstoke Park. The operation involved Laverstoke Park Produce LLP, in which Mr Scheckter held a 99% interest, and a connected limited company of which he was sole shareholder and director. The LLP carried on farming and related activities, while the company undertook animal processing and the sale of produce.
The dispute concerned sideways loss relief claimed against substantial losses of the LLP, not landlord taxation. HMRC argued that a larger trading undertaking could not comprise more than one separate legal entity. The Tribunal disagreed, concluding at paragraph 211 that the statutory expression "larger trading undertaking" was capable of including more than one legal person in appropriate circumstances.
Why the Tribunal found a single enterprise
The Tribunal found the LLP and company were managed as a single enterprise, with integrated departments, a common objective, movement of assets between the entities, a single cost centre and ultimately a single retail hub. It also found a genuine commercial reason for the two-entity structure: the company was established principally to isolate potentially significant liabilities arising from the abattoir from the LLP's other assets.
Important caveats
Property118 stresses that this does not mean landlords in Hybrid LLP arrangements have won their argument with HMRC, and anyone suggesting so would be getting well ahead of the judgment. Mr Scheckter in fact lost his appeal, and another part of the decision contains a stern warning about how connected entities should deal with each other commercially.
Property118 also states it has never recommended the mixed-member Hybrid LLP arrangements promoted by Less Tax 4 Landlords or similar providers, having warned landlords about such models years before HMRC published Spotlight 63. The publisher's interest is in what the judgment might tell us about how these arrangements should now be analysed and how the position of landlords who entered them should be corrected.
What this means for agents
Letting agents and inventory clerks whose landlord clients are caught in Spotlight 63 or 63a, including arrangements widely reported as having been marketed by Less Tax 4 Landlords and others, should note the judgment is being closely watched, but no conclusions about landlord outcomes should be drawn from it yet.
Source: Property118