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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Other tax rules on corporate finance: structured finance: partnership borrower and the relevant effect

Relevant effect where the borrower is a partnership

The borrower under a structured finance arrangement may be a partnership (CFM73080). As under UK tax law it is the members of a partnership who are charged to tax on their share of the profits of the partnership and the partnership itself is not a taxable entity, a special rule is needed to determine whether there is a relevant effect in relation to the members of that partnership. Section 759(4) looks through the partnership itself to the members of the partnership to see whether the income is charged to tax, brought into account in computing income or there is an entitlement to a deduction.