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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Business Income Manual: Computing the amount to assess: Mixed Membership Partnerships: Excess profit allocation: Condition Y

ITTOIA/S850C (3)

Condition Y applies where:

  • the non-individual member’s profit share exceeds its appropriate notional profit (see BIM82745);
  • the individual member has the power to enjoy the profit share allocated to the non-individual member (see BIM82770); and
  • it is reasonable to suppose that the non-individual member’s profit share is, in part at least, attributable to the individual member’s power to enjoy it (see BIM82790).

The fact that the Condition was not met in a particular period does not mean that it will not be met later even if the members of the partnership and ownership of the non-individual member remain the same.

It is therefore important to re-test every period.