Odey’s Fund Loses U.K. Court Fight Over Tax on Bonuses
(Bloomberg) -- Odey Asset Management LLP lost a court fight over bonuses after a London judge ruled that managers at the British fund manager couldn’t avoid paying tax on the awards.
The fund argued that an award plan at the center of the dispute was set up in the wake of the financial crisis -- when regulators sought to rein in upfront bonuses deemed to reward excessive risk-taking in the industry. Any tax reductions were “incidental,” founder Crispin Odey told the court.
But Judge Harriet Morgan said 17 managers owed income tax on the shares awarded. To say “tax saving was not a main objective of the plan but merely a consequence” or “that the tax saving is incidental only is unrealistic,” the judge said in her Feb. 4 ruling.
U.K. authorities had been investigating the cash and stock payments made to top managers as part of a plan originally dating back to 2011. Crispin Odey was not part of the complaint.
The ruling comes as the fund looks to turn the page on a wave of personal and professional crises for its eponymous founder. Crispin Odey this month was acquitted of sexual assault charges and has been battling his worst investment streak.
The U.K. tax agency noted that the plan came at the time that government had instigated a top tax rate for the country’s highest earners.
It said in a statement that it welcomed the ruling “that these arrangements do not work.”
Odey AM declined to comment.
Crispin Odey, who said he became involved at a late stage of the plan’s design, told the court the move was focused on retaining staff.
“The problem was that we were going from a place where basically we paid out their bonuses to deferring their bonuses,” Odey told the court, according to the ruling. “It was a big sum of money in absolute terms, but it was in relative terms quite a small sum of money.”
The former chief executive officer of the firm, David Stewart, said managers ultimately couldn’t have taken decisions about compensation without the input of Crispin Odey, according to the ruling. He was “a dominant person at the company,”
The Financial Times reported the judge’s decision earlier Monday.
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