The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Insertion of corporate partners, usually as members of a limited liability partnership (LLP), has become increasingly popular in recent years. This type of planning was particularly attractive given the introduction of the top rate of income tax with effect from April 2010 and the gradual reduction in corporation tax rates. Provided that cash is not required by the individual members, profit share can be allocated to the corporate partner and set aside until such time that it can be extracted, hopefully at lower rates in the future. For further information (predominantly on the pre-FA 2014 rules), see the Introducing corporate partners guidance note (subscription sensitive).
The scope for tax planning using mixed partnership structures is substantially decreased following the changes made by Finance Act 2014. The changes all affect mixed partnerships that are partnerships or LLPs of which the partners include a mixture of corporate and individual partners or members. The changes aim to counter tax motivated allocations of profits and losses to non-individual partners and to treat remuneration received by individual members of LLPs which is disguised salary as if received in the capacity of employees rather than partners.
This guidance note gives an overview of the basic rules relating to the preparation of tax computations and returns for corporate partners and the key anti-avoidance rules relating to mixed member partnerships. For general information on how profits are allocated between partners, see the Trading profits of a partnership guidance note (subscription sensitive).
For guidance on companies in partnership, see the HMRC guidance contained in PM40200 and PM40300.
General partnerships, Scottish partnerships, limited partnerships and LLPs are transparent for UK tax purposes regardless of whether they have any corporate partners / members. Computing the amount of taxable profits from a partnership is therefore very similar for companies as it is for individuals. For more information on different types of partnership, see the Is there a partnership? guidance note (subscription sensitive).
Strictly, when a partnership includes a
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