Despite his best efforts, Crispin Odey has certainly testified a lot in court lately. First, he admitted that he was a little scary when he tried to break his solemn marriage vows with a woman about half his age in order to fend off the charges he had sexually assaulted. And now this:
Odey testified before the tribunal that the tax saving was “a side effect of the whole thing” and that its importance was to meet regulatory demands on deferred pay.
The whole thing was Odey Asset Management’s post-financial crisis bonus plan, which required a handful of top hedge fund executives to postpone their share of the company’s profits for a few years until performance targets were met. But while the tax savings associated with such a plan were “accidental” for Odey, they weren’t for HM Revenue & Cutoms, which sort of thing for people who pay tax on their bonuses whenever and how ever they get them Stickler is.
Judge Harriet Morgan of the First Tier Tribunal Tax Chamber ruled that there was an additional income tax liability. It ruled that members are subject to income tax if their shares are paid out after the targets are met. The remainder of the income tax rule, she said, “is intentionally widely referred to as a kind of flexible” sweep-up “rule to capture income that should be taxable.”
Of course, it was also a fluke for Odey because it doesn’t really affect him at all.
The compensation plan was created in 2011 for senior executives, with Crispin Odey being the only exempt partner. “He has enough motivation to stay in his own company as the founder and majority shareholder,” says the planning documents cited in the decision.
Not to mention his generous personal bonus program. While for James Hanbury et. al., the hits keep coming.
Odey Asset Management loses the battle for executive payroll taxes [FT]