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HMRC internal manual

Business Income Manual

Business Income Manual: Computing the amount to assess: Mixed Membership Partnerships: Excess profit allocation: The power to enjoy

ITTOIA/S850C (18)-(21)

For Condition Y to apply, the individual must meet the power to enjoy requirement in relation to the profit that has been allocated to the non-individual member.

The individual has the power to enjoy the non-individual’s profits if:

  • the parties are connected (see BIM82775), or
  • the individual is party to arrangements a main purpose of which is to secure that the non-individual’s profit share is subject to corporation tax rules rather than income tax provisions (see BIM82780) or
  • any of the enjoyment conditions is met (see BIM82785).

This test is widely drawn and does not depend upon the individual deriving any direct benefit from the profits allocated to the non-individual member.