2A

This Chapter also provides for no relief to be given for a loss made by an individual in a trade carried on by the individual as a partner in a firm in certain cases where some or all of the loss is allocated to the individual rather than a person who is not an individual (see section 116A).

Partnerships with mixed membership etc

116AExcess loss allocation to partners who are individuals

1

Subsection (2) applies if—

a

in a tax year, an individual (“A”) makes a loss in a trade as a partner in a firm, and

b

A's loss arises, wholly or partly—

i

directly or indirectly in consequence of, or

ii

otherwise in connection with,

relevant tax avoidance arrangements.

2

No relevant loss relief may be given to A for A's loss.

3

In subsection (1)(b) “relevant tax avoidance arrangements” means arrangements—

a

to which A is party, and

b

the main purpose, or one of the main purposes, of which is to secure that losses of a trade are allocated, or otherwise arise, in whole or in part to A, rather than a person who is not an individual, with a view to A obtaining relevant loss relief.

4

In subsection (3)(b) references to A include references to A and other individuals.

5

For the purposes of subsection (3)(b) it does not matter if the person who is not an individual is not a partner in the firm or is unknown or does not exist.

6

In this section—

• “arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable), and

• “relevant loss relief” means—

  1. a

     sideways relief,

  2. b

     relief under section 83 (carry-forward trade loss relief),

  3. c

     relief under section 89 (terminal trade loss relief), or

  4. d

     capital gains relief.

7

This section applies to professions as it applies to trades.