Income Tax (Trading and Other Income) Act 2005

95 (1) Amend section 115 (provisions supplementary to section 114) as follows.

(2) For subsection (5) substitute—

“(5) Subsections (5A) and (5B) apply if—

(a) a company resident in the United Kingdom (“the resident partner”) is a member of a partnership which resides outside the United Kingdom or which carries on any trade, profession or business the control and management of which is situated outside the United Kingdom, and

(b) by virtue of any arrangements falling within section 788 (“the arrangements”) any of the income or capital gains of the partnership is relieved from corporation tax in the United Kingdom.

(5A) The arrangements do not affect any liability to corporation tax in respect of the resident partner’s share of any income or capital gains of the partnership (and section 114 has effect accordingly).

(5B) If the resident partner’s share of the income of the partnership consists of or includes a share in a qualifying distribution made by a company resident in the United Kingdom, the resident partner (and not the partnership) is, despite the arrangements, entitled to the share of the tax credit in respect of the distribution which corresponds to the partner’s share of the distribution (and section 114 has effect accordingly).”