Income and Corporation Taxes Act 1988

[F1 Limited liability partnerships U.K.

Textual Amendments

F1 Ss. 118ZA-118ZD and preceding cross-heading inserted (6.4.2001) by Limited Liability Partnerships Act 2000 (c. 12), ss. 10(1), 19(1); S.I. 2000/3316, art. 2

118ZA Treatment of limited liability partnerships. U.K.

[F2 (1) For [F3 corporation tax purposes], where a limited liability partnership carries on a trade, profession or other business with a view to profit—

(a) all the activities of the partnership are treated as carried on in partnership by its members (and not by the partnership as such),

(b) anything done by, to or in relation to the partnership for the purposes of, or in connection with, any of its activities is treated as done by, to or in relation to the members as partners, and

(c) the property of the partnership is treated as held by the members as partnership property.

References in this subsection to the activities of the limited liability partnership are to anything that it does, whether or not in the course of carrying on a trade, profession or other business with a view to profit.

(2) For all purposes, except as otherwise provided, in [F4 the Corporation Tax Acts]—

(a) references to a partnership include a limited liability partnership in relation to which subsection (1) above applies,

(b) references to members of a partnership include members of such a limited liability partnership,

(c) references to a company do not include such a limited liability partnership, and

(d) references to members of a company do not include members of such a limited liability partnership.

(3) Subsection (1) above continues to apply in relation to a limited liability partnership which no longer carries on any trade, profession or other business with a view to profit—

(a) if the cessation is only temporary, or

(b) during a period of winding up following a permanent cessation, provided—

(i) the winding up is not for reasons connected in whole or in part with the avoidance of tax, and

(ii) the period of winding up is not unreasonably prolonged,

but subject to subsection (4) below.

(4) Subsection (1) above ceases to apply in relation to a limited liability partnership—

(a) on the appointment of a liquidator or (if earlier) the making of a winding-up order by the court, or

(b) on the occurrence of any event under the law of a country or territory outside the United Kingdom corresponding to an event specified in paragraph (a) above.]

Textual Amendments

F2 S. 118ZA substituted (retrospective to 6.4.2001) by Finance Act 2001 (c. 9), s. 75(1)(6)

F3 Words in s. 118ZA(1) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 97(a) (with Sch. 2)

F4 Words in s. 118ZA(2) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 97(b) (with Sch. 2)

[F5 118ZB Restriction on relief: companies U.K.

Section 118 has effect in relation to a member of a limited liability partnership as in relation to a limited partner, but subject to sections 118ZC and 118ZD.]

Textual Amendments

F5 S. 118ZB substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 15 (with Sch. 2)

118ZC Member’s contribution to trade. U.K.

(1) Subsection (3) of [F6 section 118] does not have effect in relation to a member of a limited liability partnership.

(2) But, for the purposes of F7 . . . section 118, such a member’s contribution to a trade at any time (“the relevant time”) is the greater of—

(a) the amount subscribed by [F8 it], and

(b) the amount of [F9 its] liability on a winding up.

(3) The amount subscribed by a member of a limited liability partnership is the amount which [F10 it] has contributed to the limited liability partnership as capital, less so much of that amount (if any) as—

(a) [F10 it] has previously, directly or indirectly, drawn out or received back,

(b) [F10 it] so draws out or receives back during the period of five years beginning with the relevant time,

(c) [F10 it] is or may be entitled so to draw out or receive back at any time when [F11 it] is a member of the limited liability partnership, or

(d) [F10 it] is or may be entitled to require another person to reimburse to [F11 it].

(4) The amount of the liability of a member of a limited liability partnership on a winding up is the amount which—

(a) [F12 it] is liable to contribute to the assets of the limited liability partnership in the event of [F13 the partnership's] being wound up, and

(b) [F12 it] remains liable so to contribute for the period of at least five years beginning with the relevant time (or until [F14 the partnership] is wound up, if that happens before the end of that period).

[F15 (5) F16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F6 Words in s. 118ZC(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(2) (with Sch. 2)

F7 Words in s. 118ZC(2) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(3)(a), Sch. 3 Pt. 1 (with Sch. 2)

F8 Word in s. 118ZC(2)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(3)(b) (with Sch. 2)

F9 Word in s. 118ZC(2)(b) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(3)(c) (with Sch. 2)

F10 Words in s. 118ZC(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(4)(a) (with Sch. 2)

F11 Word in s. 118ZC(3)(d) substituted (with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(4)(b) (with Sch. 2)

F12 Words in s. 118ZC(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(5)(a) (with Sch. 2)

F13 Words in s. 118ZC(4)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(5)(b) (with Sch. 2)

F14 Words in s. 118ZC(4) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(5)(c) (with Sch. 2)

F15 S. 118ZC(5) inserted (retrospective to 2.12.2004) by Finance Act 2005 (c. 7), s. 73(3)(5)

F16 S. 118ZC(5) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 16(6), Sch. 3 Pt. 1 (with Sch. 2)

118ZD Carry forward of unrelieved losses. U.K.

(1) Where amounts relating to a trade carried on by a member of a limited liability partnership are, in any one or more [F17 accounting periods], prevented from being given or allowed by section F18 . . . 118 as it applies otherwise than by virtue of this section ([F19 the member's]“total unrelieved loss”), subsection (2) applies in each subsequent [F20 accounting period] in which—

(a) [F21 the member] carries on the trade as a member of the limited liability partnership, and

(b) any of [F19 the member's] total unrelieved loss remains outstanding.

(2) [F22 Sections 393A(1) and 403 (and section 118 as it applies] in relation to those sections) shall have effect in the subsequent [F23 accounting period] as if—

(a) any loss sustained or incurred by the member in the trade in that [F23 accounting period] were increased by an amount equal to so much of [F24 the member's] total unrelieved loss as remains outstanding in that period, or

(b) (if no loss is so sustained or incurred) a loss of that amount were so sustained or incurred.

(3) To ascertain whether any (and, if so, how much) of a member’s total unrelieved loss remains outstanding in the subsequent [F25 accounting period], deduct from the amount of [F26 the member's] total unrelieved loss the aggregate of—

(a) any relief given under any provision of [F27 the Corporation Tax Acts] (otherwise than as a result of subsection (2)) in respect of [F26 the member's] total unrelieved loss in that or any previous [F25 accounting period], and

(b) any amount given or allowed in respect of [F26 the member's] total unrelieved loss as a result of subsection (2) in any previous [F25 accounting period] (or which would have been so given or allowed had a claim been made).]

Textual Amendments

F17 Words in s. 118ZD(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(2)(a) (with Sch. 2)

F18 Words in s. 118ZD(1) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(2)(b), Sch. 3 Pt. 1 (with Sch. 2)

F19 Words in s. 118ZD(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(2)(c) (with Sch. 2)

F20 Words in s. 118ZD(1) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(2)(d) (with Sch. 2)

F21 Words in s. 118ZD(1)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(2)(e) (with Sch. 2)

F22 Words in s. 118ZD(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(3)(a) (with Sch. 2)

F23 Words in s. 118ZD(2) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(3)(b) (with Sch. 2)

F24 Words in s. 118ZD(2)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(3)(c) (with Sch. 2)

F25 Words in s. 118ZD(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(4)(a) (with Sch. 2)

F26 Words in s. 118ZD(3) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(4)(b) (with Sch. 2)

F27 Words in s. 118ZD(3)(a) substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 17(4)(c) (with Sch. 2)