Revenue Note for Guidance
This section provides that a company’s profit from a trade carried on in partnership with others is regarded as arising from a separate trade (the “several trade”) and is taxed accordingly. The section ensures that a company’s share for an accounting period of the profits of a trade which it carries on in partnership with others is charged to corporation tax for that accounting period.
(1) The word “profits” is not to be taken as including chargeable gains. Section 30 contains separate provision for the charge to capital gains tax in partnership cases.
(2) The provisions of subsections (1), (2)(a) and (3) of section 1008 are to apply for corporation tax purposes as they apply for income tax purposes. This application imports the concept of a “several trade” into corporation tax and makes provision for the treatment of a company’s share of the charges on income paid by a partnership and the ascertainment of a company’s share of the partnership profit or loss.
(3) Where the period for which the accounts of a partnership have been made up does not coincide with a partner company’s accounting period for corporation tax purposes any necessary apportionments are to be made of the partner company’s share of the partnership profits or losses in order to arrive at its share of these profits or losses for the company’s corporation tax accounting period.
(4) Where an appropriate share of a joint allowance or joint charge (under section 1010, this means a company’s share of the capital allowance or charges of the partnership) would be made for a year of assessment for income tax purposes if the company continued to be liable to that tax, the “relevant amount” is to be treated as an expense or receipt of the company’s share of the partnership trade for any part of its corporation tax accounting period which falls within that year of assessment. A joint allowance for a year of assessment is not to include any part of an allowance brought forward from a previous year of assessment. The “relevant amount” means the whole amount of the appropriate share of the joint allowance or the whole amount of the appropriate share of the joint charge, where the accounting period and the year of assessment coincide and a proportion of such allowance or charge where the accounting period does not coincide with the year of assessment.
(5) Any apportionments necessary for the purposes of the section are to be made on a time basis.
Relevant Date: Finance Act 2021