|
| |
|
108 | Meaning of “contribution to the LLP” |
| |
(1) | For the purposes of section 107 the individual’s contribution to the LLP at any |
| |
time (“the relevant time”) is the sum of amounts A and B. |
| |
(2) | Amount A is the amount which the individual has contributed to the LLP as |
| |
capital less so much of that amount (if any) as is within subsection (5). |
| 5 |
(3) | In particular, the individual’s share of any profits of the LLP is to be included |
| |
in the amount which the individual has contributed to the LLP as capital so far |
| |
as that share has been added to the LLP’s capital. |
| |
(4) | In subsection (3) the reference to profits is to profits calculated in accordance |
| |
with generally accepted accounting practice (before any adjustment required |
| 10 |
or authorised by law in calculating profits for income tax purposes). |
| |
(5) | An amount of capital is within this subsection if it is an amount which— |
| |
(a) | the individual has previously drawn out or received back, |
| |
(b) | the individual draws out or receives back during the period of 5 years |
| |
beginning with the relevant time, |
| 15 |
(c) | the individual is or may be entitled to draw out or receive back at any |
| |
time when the individual is a member of the LLP, or |
| |
(d) | the individual is or may be entitled to require another person to |
| |
reimburse to the individual. |
| |
(6) | In subsection (5) any reference to drawing out or receiving back an amount is |
| 20 |
to doing so directly or indirectly but does not include drawing out or receiving |
| |
back an amount which, because of its being drawn out or received back, is |
| |
chargeable to income tax as profits of a trade. |
| |
(7) | Amount B is the amount of the individual’s liability on a winding up of the LLP |
| |
so far as that amount is not included in amount A. |
| 25 |
(8) | For the purposes of subsection (7) the amount of the individual’s liability on a |
| |
winding up of the LLP is the amount which— |
| |
(a) | the individual is liable to contribute to the assets of the LLP in the event |
| |
of its being wound up, and |
| |
(b) | the individual remains liable to contribute for the period of at least 5 |
| 30 |
years beginning with the relevant time (or until the LLP is wound up, |
| |
if that happens before the end of that period). |
| |
(9) | This section needs to be read with any regulations made under section 114 |
| |
(specified amounts to be excluded in calculating the individual’s contribution |
| |
to the LLP for the purposes of section 107). |
| 35 |
109 | Unrelieved losses brought forward |
| |
(1) | This section applies for the purpose of determining an individual’s entitlement |
| |
to sideways relief and capital gains relief if— |
| |
(a) | the individual carries on a trade as a member of an LLP at a time during |
| |
a tax year (“the current tax year”), and |
| 40 |
(b) | as a result of section 107, sideways relief or capital gains relief has not |
| |
been given to the individual for amounts of loss made in the trade in |
| |
| |
|
| |
|
| |
|
(2) | So far as they are not excluded by subsection (3), the amounts of loss |
| |
mentioned in subsection (1)(b) are treated as having been made in the current |
| |
| |
(3) | An amount of loss is excluded so far as— |
| |
(a) | as a result of this section, sideways relief or capital gains relief has been |
| 5 |
given to the individual for the amount for years prior to the current tax |
| |
year or would have been so given had a claim been made, or |
| |
(b) | other than as a result of this section, relief under the Income Tax Acts |
| |
has been given to the individual for the amount for years prior to the |
| |
current tax year or for the current tax year. |
| 10 |
Non-active members of LLPs or other partnerships (apart from limited partnerships) |
| |
110 | Restriction on reliefs for non-active partners in early tax years |
| |
(1) | This section applies if— |
| |
(a) | an individual carries on a trade (“the relevant trade”) as a non-active |
| |
partner in a firm during an early tax year (see section 112), and |
| 15 |
(b) | the individual makes a loss in the relevant trade in that tax year (“the |
| |
| |
(2) | There is a restriction on the amount of relief within subsection (3) which may |
| |
be given to the individual for the loss. |
| |
(3) | The relief within this subsection is— |
| 20 |
(a) | sideways relief against the individual’s income apart from profits of the |
| |
| |
(b) | capital gains relief. |
| |
(4) | The restriction is that— |
| |
(a) | the sum of the amount of the relief given and the total amount of all |
| 25 |
other relevant relief given, less |
| |
(b) | the total amount of recovered relief, |
| |
| must not exceed the individual’s contribution to the firm as at the end of the basis |
| |
period for the relevant tax year (see section 111). |
| |
(5) | “Relevant relief” means sideways relief or capital gains relief given to the |
| 30 |
| |
(a) | a loss made in the relevant trade in a tax year at a time during which |
| |
the individual carries on that trade as a limited partner or as a member |
| |
| |
(b) | a loss made in the relevant trade in an early tax year during which the |
| 35 |
individual carries on that trade as a non-active partner. |
| |
(6) | “The total amount of recovered relief” means the total amount of income |
| |
treated as received by the individual under section 725 (recovery of excess |
| |
relief) as a result of the application of that section in relation to claims for relief |
| |
for losses made by the individual in the relevant trade. |
| 40 |
(7) | If the firm is carrying on, or has carried on, other trades apart from the relevant trade, |
| |
for the purpose of determining the total amount of all other relevant relief and the total |
| |
amount of recovered relief— |
| |
(a) | apply subsection (5) in relation to each other trade as well as the relevant trade |
| |
and then add the results together, and |
| 45 |
|
| |
|
| |
|
(b) | apply subsection (6) as if the reference to the relevant trade were a reference to |
| |
the relevant trade or any of the other trades. |
| |
(8) | In this section “trade” does not include a trade which consists of the |
| |
underwriting business of a member of Lloyd’s (within the meaning of section |
| |
| 5 |
111 | Meaning of “contribution to the firm” |
| |
(1) | For the purposes of section 110 the individual’s contribution to the firm at any |
| |
time (“the relevant time”) is the sum of amount A and amount B and, if there |
| |
is a winding up of the firm, amount C. |
| |
(2) | Amount A is the amount which the individual has contributed to the firm as |
| 10 |
capital less so much of that amount (if any) as is within subsection (4). |
| |
(3) | In particular, the individual’s share of any profits of the firm is to be included |
| |
in the amount which the individual has contributed to the firm as capital so far |
| |
as that share has been added to the firm’s capital. |
| |
(4) | An amount of capital is within this subsection if it is an amount which— |
| 15 |
(a) | the individual has previously drawn out or received back, |
| |
(b) | the individual draws out or receives back during the period of 5 years |
| |
beginning with the relevant time, |
| |
(c) | the individual is or may be entitled to draw out or receive back at any |
| |
time when the individual is carrying on a trade as a partner in the firm, |
| 20 |
| |
(d) | the individual is or may be entitled to require another person to |
| |
reimburse to the individual. |
| |
(5) | In subsection (4) any reference to drawing out or receiving back an amount is |
| |
to doing so directly or indirectly but does not include drawing out or receiving |
| 25 |
back an amount which, because of its being drawn out or received back, is |
| |
chargeable to income tax as profits of a trade. |
| |
(6) | Amount B is the amount of the individual’s total share of profits within |
| |
subsection (7) except so far as— |
| |
(a) | that share has been added to the firm’s capital, or |
| 30 |
(b) | the individual has received that share in money or money’s worth. |
| |
(7) | Profits are within this subsection if they are from the relevant trade. |
| |
(8) | In determining the amount of the individual’s total share of profits within |
| |
subsection (7) ignore the individual’s share of any losses from the relevant |
| |
trade which would (apart from this subsection) reduce that amount. |
| 35 |
(9) | In subsections (3), (7) and (8) any reference to profits or losses are to profits or |
| |
losses calculated in accordance with generally accepted accounting practice |
| |
(before any adjustment required or authorised by law in calculating profits or |
| |
losses for income tax purposes). |
| |
(10) | If the firm is carrying on, or has carried on, other trades apart from the relevant |
| 40 |
trade, subsections (7) and (8) have effect as if references to the relevant trade |
| |
were references to the relevant trade or any of the other trades. |
| |
| Subsection (8) of section 110 applies for the purposes of this subsection as it |
| |
applies for the purposes of that section. |
| |
|
| |
|
| |
|
(11) | Amount C is the amount which the individual has contributed to the assets of |
| |
the firm on its winding up so far as it is not included in amount A or B. |
| |
(12) | This section needs to be read with any regulations made under section 114 |
| |
(specified amounts to be excluded in calculating the individual’s contribution |
| |
to the firm for the purposes of section 110). |
| 5 |
112 | Meaning of “non-active partner” and “early tax year” etc |
| |
(1) | For the purposes of this Chapter an individual carries on a trade as a non-active |
| |
partner during a tax year if the individual— |
| |
(a) | carries on the trade as a partner in a firm at a time during the year, |
| |
(b) | does not carry on the trade as a limited partner at any time during the |
| 10 |
| |
(c) | does not devote a significant amount of time to the trade in the relevant |
| |
| |
(2) | For the purposes of this Chapter an individual devotes a significant amount of |
| |
time to a trade in the relevant period for a tax year if, in that period, the |
| 15 |
individual spends an average of at least 10 hours a week personally engaged |
| |
in activities carried on for the purposes of the trade. |
| |
(3) | For this purpose “the relevant period” means the basis period for the tax year |
| |
(unless the basis period is shorter than 6 months). |
| |
(4) | If the basis period for the tax year is shorter than 6 months, “the relevant |
| 20 |
| |
(a) | the period of 6 months beginning with the date on which the individual |
| |
first started to carry on the trade (if the basis period begins with that |
| |
| |
(b) | the period of 6 months ending with the date on which the individual |
| 25 |
permanently ceased to carry on the trade (if the basis period ends with |
| |
| |
| |
(a) | any relief is given on the assumption that the individual devoted or will |
| |
devote a significant amount of time to the trade in the relevant period |
| 30 |
| |
(b) | the individual in fact failed or fails to do so, |
| |
| the relief is withdrawn by the making of an assessment to income tax under |
| |
| |
(6) | In this Chapter “early tax year” means, in relation to an individual carrying on |
| 35 |
| |
(a) | the tax year in which the individual first started to carry on the trade, or |
| |
(b) | one of the next 3 tax years. |
| |
113 | Unrelieved losses brought forward |
| |
(1) | This section applies for the purpose of determining an individual’s entitlement |
| 40 |
to sideways relief and capital gains relief in relation to a trade if— |
| |
(a) | at a time during a tax year (“the current tax year”) the individual carries |
| |
on the trade as a partner in a firm or makes a contribution to the assets |
| |
of a firm within subsection (2) on the firm’s winding up, and |
| |
|
| |
|
| |
|
(b) | as a result of section 110, sideways relief or capital gains relief has not |
| |
been given to the individual for amounts of loss made in the trade in |
| |
| |
(2) | A firm is within this subsection if the individual has carried on the trade as a |
| |
| 5 |
(3) | So far as they are not excluded by subsection (4), the amounts of loss |
| |
mentioned in subsection (1)(b) are treated as having been made in the current |
| |
| |
(4) | An amount of loss is excluded so far as— |
| |
(a) | as a result of this section, sideways relief or capital gains relief has been |
| 10 |
given to the individual for the amount for years prior to the current tax |
| |
year or would have been so given had a claim been made, or |
| |
(b) | other than as a result of this section, relief under the Income Tax Acts |
| |
has been given to the individual for the amount for years prior to the |
| |
current tax year or for the current tax year. |
| 15 |
(5) | For the purpose of applying sections 107 and 110 in relation to the amounts of |
| |
loss treated by this section as having been made in the current tax year— |
| |
(a) | the individual is treated as having carried on the trade during the |
| |
current tax year as a non-active partner in the firm, and |
| |
(b) | the current tax year is treated as if it were an early tax year in relation |
| 20 |
to the individual’s carrying on of the trade. |
| |
(6) | Subsection (7) applies if the individual— |
| |
(a) | made a contribution in the current tax year to the assets of the firm on |
| |
| |
(b) | did not carry on the trade as a partner in the firm in the current tax year. |
| 25 |
(7) | If this subsection applies— |
| |
(a) | the restrictions under sections 66 and 74(1) do not apply in relation to |
| |
the amounts of loss treated by this section as having been made in the |
| |
| |
(b) | in the application of this Chapter in relation to those amounts of loss, |
| 30 |
section 110(4) has effect as if the words “the basis period for” were |
| |
| |
(8) | In subsection (1)(b) the reference to amounts of loss does not include amounts |
| |
of loss which have been treated by section 109 as having been made in any |
| |
| 35 |
| |
114 | Exclusion of amounts in calculating contribution to the firm or LLP |
| |
(1) | The Commissioners for Her Majesty’s Revenue and Customs may by |
| |
regulations provide that any amount of a specified description is to be |
| |
| 40 |
(a) | the individual’s contribution to the firm for the purposes of section 104 |
| |
| |
(b) | the individual’s contribution to the LLP for the purposes of section 107. |
| |
(2) | “Specified” means specified in the regulations. |
| |
|
| |
|
| |
|
| |
(a) | make provision having retrospective effect, |
| |
(b) | contain incidental, supplemental, consequential and transitional |
| |
provision and savings, and |
| |
(c) | make different provision for different cases or purposes. |
| 5 |
(4) | The provision which may be made as a result of subsection (3)(b) includes |
| |
provision amending or repealing any provision of an Act passed before FA |
| |
| |
(5) | No regulations may be made under this section unless a draft of them has been |
| |
laid before and approved by a resolution of the House of Commons. |
| 10 |
Restrictions for film trades carried on in partnership |
| |
115 | Restrictions on reliefs for firms exploiting films |
| |
(1) | This section applies if— |
| |
(a) | an individual carries on a trade as a partner in a firm at a time during a |
| |
| 15 |
(b) | the trade consists of or includes the exploitation of films, |
| |
(c) | the individual makes a loss in the trade in the tax year (“the affected tax |
| |
| |
(d) | the individual does not devote a significant amount of time to the trade |
| |
in the relevant period for the affected tax year (see section 112), |
| 20 |
(e) | the affected tax year is the one in which the individual first started to |
| |
carry on the trade or is one of the next 3 tax years, and |
| |
(f) | a relevant agreement existed at a time during the affected tax year |
| |
which guaranteed the individual an amount of income (see subsections |
| |
| 25 |
(2) | Sideways relief for the loss is not available to the individual, except against any |
| |
of the individual’s income which consists of profits of the trade. |
| |
(3) | Capital gains relief for the loss is not available to the individual. |
| |
(4) | But see section 116 (exclusion from restrictions for certain film expenditure). |
| |
(5) | An agreement is relevant if— |
| 30 |
(a) | it is an agreement made with a view to the individual’s carrying on the |
| |
| |
(b) | it is an agreement made in the course of the individual’s carrying it on, |
| |
| |
(c) | it is related to an agreement falling within paragraph (a) or (b). |
| 35 |
(6) | An agreement is relevant whether or not the individual is or may be required |
| |
under the agreement to contribute an amount to the trade. |
| |
(7) | Agreements are related to one another if they are entered into under the same |
| |
arrangement (regardless of when either agreement is entered into). |
| |
(8) | A relevant agreement guarantees the individual an amount of income if it (or |
| 40 |
any part of it) is designed to secure the receipt by the individual of that amount |
| |
(or at least that amount) of income. |
| |
(9) | It does not matter when the amount of income is (or is to be) received. |
| |
|
| |
|
| |
|
(10) | In this section “film” is to be read in accordance with paragraph 1 of Schedule |
| |
1 to the Films Act 1985 (c. 21). |
| |
116 | Exclusion from restrictions under section 115: certain film expenditure |
| |
(1) | The restrictions under section 115 do not apply to so much of the loss (if any) |
| |
as derives from unrestricted film expenditure. |
| 5 |
(2) | Expenditure is unrestricted film expenditure if— |
| |
(a) | it is deducted under a relevant film provision for the purposes of the |
| |
calculation required by section 849 of ITTOIA 2005 (calculation of |
| |
firm’s profits or losses), or |
| |
(b) | it is incidental expenditure which (although not deducted under a |
| 10 |
relevant film provision) is incurred in connection with the production |
| |
of a film, or the acquisition of the original master version of a film, in |
| |
relation to which expenditure is so deducted. |
| |
(3) | Expenditure is incidental if it is on management, administration or obtaining |
| |
| 15 |
(4) | The following are determined on a just and reasonable basis— |
| |
(a) | the amount of the loss that derives from unrestricted film expenditure, |
| |
| |
(b) | the extent to which expenditure is within subsection (2)(b). |
| |
| 20 |
“the acquisition of the original master version of a film” has the same |
| |
meaning as in Chapter 9 of Part 2 of ITTOIA 2005 (see sections 130 and |
| |
| |
“film” is to be read in accordance with paragraph 1 of Schedule 1 to the |
| |
| 25 |
“a relevant film provision” means any one of sections 137 to 140 of ITTOIA |
| |
2005 (relief for certified master versions of films). |
| |
| |
Losses from property businesses |
| |
| 30 |
| |
| |
(a) | provides for losses made in a UK property business or overseas |
| |
property business in a tax year to be carried forward for deduction |
| |
from profits in subsequent tax years (see sections 118 and 119), |
| 35 |
(b) | provides in limited circumstances for relief against general income for |
| |
losses made in a UK property business or overseas property business |
| |
(see sections 120 to 124), and |
| |
(c) | provides for relief for certain post-cessation payments and events in |
| |
connection with a UK property business (see section 125). |
| 40 |
(2) | This Chapter also makes provision for a UK property business which consists |
| |
of, or so far as it includes, the commercial letting of furnished holiday |
| |
|
| |
|