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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Deemed loan relationships: returns from partnerships: conditions for CTA09/S536

Conditions for CTA09/S536

This guidance applies to companies that have interests in partnerships up to 21 April 2009 

If one of the two conditions at either CTA09/S537 or S538 are met, then S536 will apply.

CTA09/S537

S537(1) sets out a condition for S536 to apply:

These are that a company has to be party to ‘relevant arrangements’ under which:

  • a partnership of which it is a member is or may become entitled to receive a capital contribution from any person (directly or indirectly), and
  • the person making the capital contribution or a connected person receives a sum of money or other asset from that company (directly or indirectly).

CTA09/S538

S538(1) sets out a condition for S536 to apply:

These are that a company has to be party to ‘relevant arrangements’ under which:

  • the company makes a capital contribution to a partnership of which it is a member, and
  • the company is allocated less than its ‘due share’ of the profits, and
  • the company, or a person connected to the company, is entitled to more than its ‘due share’ of the capital.

The terms ‘relevant arrangements’, ‘connected persons’, ‘arrangements’, ‘tax advantage’ and ‘due share’ are explained at CFM45450.