Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
, see all updates

Loan relationships: partnerships: credits and debits calculated separately for each partner

Applying the loan relationships rules

CTA09/PT5/CH9 applies where the following conditions, in S380, are satisfied.

  • A trade, profession or business is carried on by persons in partnership (‘the firm’),
  • any of those persons is a company (a ‘company partner’), and
  • a money debt is owed by or to the firm.

‘Money debt’ is defined at CTA09/S301 - see CFM31020.

Computing the profits

When computing the partnership profits in accordance with CTA09/PT17, S380 excludes any debits or credits from

  • the money debt, or
  • any loan relationship that would be treated as arising from that money debt (such as interest on trade debts).

The debits and credits are instead computed separately for each company partner, by

  • calculating the gross debits and credits (CFM36030), then
  • apportioning them between each partner (CFM36040).