Corporation Tax Act 2010 Explanatory Notes

Section 55: Introduction to Chapter

213.This section provides an overview of the Chapter. It is new.

214.The Chapter applies to companies that are either limited partners or member of limited liability partnerships. It limits the amount of relief that may be given under section 37(other than against profits of the trade) or in respect of group relief. Carry-forward losses under section 45 are not affected.

215.Broadly, relief given must not exceed the amount that the company stands to lose commercially.

216.The source legislation expressed the amount that a partner stands to lose commercially by reference to the partner’s contribution to the trade that a partnership carries on (the “contribution to the trade”). But, in such cases, the amount that a partner stands to lose commercially is more likely to be reflected in the partner’s contribution to the partnership that carries on the trade.

217.So this Chapter makes a change by expressing the amount that a partner stands to lose commercially in terms of the partner’s contribution to the partnership (the “contribution to the firm”). The change to “contribution to the firm” requires that the possibility of there being partnerships with more than one trade is addressed; and, for consistency with other partnerships, the possibility of a limited liability partnership carrying on more than one trade is also addressed.

218.This change also makes a number of clarifications as to what is included in a partner’s contribution. See Change 8 in Annex 1.

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