Corporation Tax Act 2010

57Meaning of “contribution to the firm”

(1)For the purposes of section 56 the company’s contribution to the firm is the sum of amounts A and B.

(2)Amount A is the amount which the company has contributed to the firm as capital less so much of that amount (if any) as is within subsection (4).

(3)In particular, the company’s share of any profits of the firm is to be included in the amount which the company 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 the company—

(a)has previously drawn out or received back,

(b)is or may be entitled to draw out or receive back at any time when the company is carrying on a trade as a limited partner in the firm, or

(c)is or may be entitled to require another person to reimburse to it.

(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 back an amount which, because of its being drawn out or received back, is chargeable to tax as profits of a trade.

(6)Amount B is the amount of the company’s total share of profits within subsection (7) except so far as—

(a)that share has been added to the firm’s capital, or

(b)the company has received that share in money or money’s worth.

(7)Profits are within this subsection if they are from the limited partnership trade.

(8)In determining the amount of the company’s total share of profits within subsection (7) ignore the company’s share of any losses from the limited partnership trade which would (apart from this subsection) reduce that amount.

(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 tax purposes).

(10)If the firm is carrying on, or has carried on, other trades apart from the limited partnership trade, subsections (7) and (8) have effect as if references to the limited partnership trade were references to the limited partnership trade or any of the other trades.