Chapter 3: Transfer of relief within partnerships
Overview
2861.This Chapter deals with arrangements within firms for transferring relief between partners.
Section 958: Application
2862.This section sets the scope of the Chapter. It is based on section 116 of ICTA.
Section 959: Arrangements for transfer of relief
2863.This section sets out the sorts of arrangements to which the Chapter applies. It is based on section 116 of ICTA.
2864.Subsection (1) identifies four effects that the arrangements may have. Effects 1 and 2 correspond to paragraph (b) of section 116(1) of ICTA; Effects 3 and 4 correspond to paragraph (a) of section 116(1) of ICTA.
2865.Subsection (2) makes clear that the Chapter operates by reference to part of a company’s share of the firm’s profits or losses as it operates by reference to the whole of the profits or losses. So the Act does not reproduce from section 116(1) of ICTA “any portion of” any of the profits or losses.
2866.Subsection (4) is the rule that a payment for group relief (see also section 183) does not trigger the anti-avoidance rules in this Chapter.
Section 960: Restrictions on use of reliefs
2867.This section sets out the results if this Chapter applies. It is based on section 116 of ICTA.
2868.Subsection (1) is the rule about the firm’s losses. The partner company’s share of the firm’s trading loss is available only against its share of profits from the same trade. This means that a claim may be made under section 45 (losses carried forward) but not under section 37 (relief against total profits).
2869.Subsection (3) is the rule about the firm’s profits. It isolates the partner company’s share of the profits from reliefs that would otherwise be available (unless they are losses of the firm’s trade available in accordance with subsection (1)). So the partner company may not set against its share of the firm’s profits either:
trading losses of another trade (paragraph (a) of the subsection); or
other reliefs (paragraph (b) of the subsection).
Section 961: Non-trading profits and losses
2870.This section extends the Chapter so that it applies to non-trading activities carried on in partnership as it applies to trades. It is based on section 116 of ICTA.
2871.Subsection (1) identifies the non-trading profits to which the Chapter applies. They are the profits from the sources listed in section 1173.
2872.Subsection (3) is a rule for “special leasing” allowances within section 259 or 260 of CAA. The partner company’s share of the allowances is not available against the partner company’s other profits.
Section 962: Interpretation of Chapter
2873.This section provides some definitions. It is based on section 116 of ICTA.
2874.Subsection (2) is a link to Part 17 of CTA 2009 (partnerships). In particular, “accounting period of a firm” is explained in section 1261 of that Act as meaning the accounting period of the company that is deemed to carry on the firm’s trade.
2875.The definition of “connected person” is in section 1122 of this Act, as applied by section 1176(1).
