PM217000 - When do the rules apply?

S850C (1)-(4) ITTOIA 2005

The excess profit allocation rules apply where:

  • in a period of account, a partnership has a taxable profit;
  • a share of the profit is allocated to a non-individual member;
  • Condition X or Y is met.

Condition X is that it is reasonable to suppose that amounts representing the individual바카라 사이트™s deferred profit are included in the non-individual바카라 사이트™s profit share and in consequence both the individual바카라 사이트™s profit share and the relevant tax amount (see PM22900) are lower than they would otherwise have been. For guidance on Condition X (see PM218000).

Condition Y is that:

바카라 사이트¢ the non-individual바카라 사이트™s profit share exceeds the appropriate notional profit (see PM220000);

바카라 사이트¢ the individual has the power to enjoy the non-individual바카라 사이트™s profit share (see PM224000);

바카라 사이트¢ it is reasonable to suppose that the whole or any part of the non-individual바카라 사이트™s profit share is attributable to the individual바카라 사이트™s power to enjoy (see PM228000); and

바카라 사이트¢ both the individual바카라 사이트™s profit share and the relevant tax amount are lower than they would have been in the absence of A바카라 사이트™s power to enjoy (see PM229000).

For further guidance on Condition Y see PM219000.

Sometimes a profit share may fall within both Condition X and Condition Y. In this situation, the rules of Condition X should be applied.