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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Business Income Manual: Computing the amount to assess: Mixed Membership Partnerships: Excess profit allocation: Reallocations: non-individuals

ITTOIA/S850C(5) and CTA2009/S1264A

As the individual is being taxed on part of the profit share allocated to the non-individual member, the taxable profit share of the latter has to be reduced, so that the profits are taxed only once.

There may be differences between the way that the taxable profits are calculated for individual and non-individual members, in particular, due to different computational rules for income tax and corporation tax.

Therefore, rather than simply reducing the profit share of the non-individual member by the amount by which the individual members’ profit shares are increased, any adjustment should be made on a just and reasonable basis taking into account the facts of that case.