Taxation of Chargeable Gains Act 1992

[F1 Profits and assets test U.K.

Textual Amendments

F1 Sch. 7ZA inserted (with effect in accordance with Sch. 13 para. 6(1) of the amending Act) by Finance Act 2016 (c. 24), Sch. 13 para. 5

15 U.K. P passes the profits and assets test in relation to a partnership if, throughout the relevant period, the sum of the percentages given by paragraphs (a), (b) and (c) is at least 5%—

(a) the percentage which is P's direct interest in the assets of the partnership,

(b) the percentage which is P's share of the partnership through direct interest companies that are members of the partnership (see paragraph 16), and

(c) the percentage which is P's share of the partnership through direct interest companies and relevant corporate partners in the partnership (see paragraph 18).

16 U.K. P's “share of the partnership through direct interest companies that are members of the partnership” is found by—

(a) calculating the percentage which is P's indirect share of the partnership through each direct interest company that is a member of the partnership (see paragraph 17), and

(b) where there are two or more direct interest companies that are members of the partnership, adding those percentages together.

17 U.K. The percentage which is P's indirect share of the partnership through a particular direct interest company that is a member of the partnership (“company DICP”) at a particular time is given by—

where—

R is the fraction of company DICP's ordinary share capital that is owned by P at that time, and

V is the lower of—

(a)

the fraction of the profits of the partnership in which company DICP has an interest at that time, and

(b)

the fraction of the assets of the partnership in which company DICP has an interest at that time.

18 U.K. P's “share of the partnership through direct interest companies and relevant corporate partners in the partnership” is found by—

(a) calculating the percentage which is P's indirect share of the partnership through each direct interest company and each relevant corporate partner in the partnership (see paragraph 19), and

(b) where there are two or more direct interest companies or two or more relevant corporate partners, or both, adding those percentages together.

19 U.K. The percentage which is P's indirect share of the partnership through a particular direct interest company (“company DIC”) and a particular relevant corporate partner in the partnership (“company CP”) at a particular time is given by—

where—

R is the fraction of company DIC's ordinary share capital that is owned by P at that time,

V is the lower of—

(a)

the fraction of the profits of the partnership in which company CP has an interest at that time, and

(b)

the fraction of the assets of the partnership in which company CP has an interest at that time, and

W is the fraction of company CP's ordinary share capital that is owned by company DIC at that time (whether it is owned directly, indirectly, or partly directly and partly indirectly) (see paragraph 20).

20 (1) The fraction of a company's ordinary share capital that is owned indirectly by company DIC is calculated— U.K.

(a) by applying sections 1156 and 1157 of CTA 2010, as read with section 1155 of that Act, and

(b) on the assumptions specified in sub-paragraph (2).

(2) The assumptions are—

(a) where company DIC directly owns more than 50% of the ordinary share capital of a company, company DIC is taken to own the whole of the ordinary share capital of that company;

(b) where a company other than company DIC (“company B”) directly owns more than 50% of the ordinary share capital of another company (“company C”) which is a member of a group of companies of which company DIC is a member, company B is taken to own the whole of the ordinary share capital of company C.]