Contributed by ACCA, in their own words
Partnership and mixed membership
Legislation will be introduced in the Finance Bill 2014 in relation to mixed membership partnerships to reallocate excess profits allocated to a non-individual partner to an individual partner where the following conditions are met:
- a non-individual partner has a share of the firm’s profit
- the non-individual’s share is excessive
- an individual partner has the power to enjoy the non-individual’s share or there are deferred profit arrangements in place
- it is reasonable to suppose that the whole or part of the non-individual’s share is attributable to that power or arrangements.
The legislation will include provision so that excess profits can be reallocated to an individual who is not a partner if it is reasonable to suppose that the individual would have been a partner but for the new rules, and the whole or part of the non-individual’s share is attributable to the individual’s power to enjoy the non-individual’s share or to deferred profit arrangements.
Legislation will also be introduced in the Finance Bill 2014 to deny certain income tax loss reliefs and capital gains relief for a loss allocated to an individual partner where the individual is party to arrangements, one of the main purposes of which is to secure that some or all of the loss is allocated, or otherwise arises, to the individual, instead of a non-individual, with a view to the individual obtaining relief.