Part 9

Partnerships

Firms with trading and other source income

Overlap profits from partners' notional businesses
856
1
This section applies if—
a
the basis period for a partner’s notional business for a tax year is given by—
i
section 215 (change of accounting date in third tax year), or
ii
section 216(3) (change of accounting date in later tax year),
b
a deduction is to be made for overlap profit under section 220 in calculating the profits of the notional business of the tax year, and
c
the amount to be deducted exceeds the amount which would otherwise be the amount of the profits of the notional business of the tax year.
2
This section also applies if—
a
the basis period for a partner’s notional business for a tax year is given by section 202 (final tax year),
b
a deduction is to be made for overlap profit under section 205 in calculating the profits of the notional business of the tax year, and
c
the amount to be deducted exceeds the amount which would otherwise be the amount of the profits of the notional business of the tax year.
3
The amount of the excess is to be deducted in calculating the partner’s income for the tax year.