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Section 863 Limited liability partnershipsC1C2

United Kingdom

(1)

For income tax purposes, if a limited liability partnership carries on a trade, profession or business with a view to profit—

(a)

all the activities of the limited liability partnership are treated as carried on in partnership by its members (and not by the limited liability partnership as such),

(b)

anything done by, to or in relation to the limited liability partnership for the purposes of, or in connection with, any of its activities is treated as done by, to or in relation to the members as partners, and

(c)

the property of the limited liability partnership is treated as held by the members as partnership property.

References in this subsection to the activities of the limited liability partnership are to anything that it does, whether or not in the course of carrying on a trade, profession or business with a view to profit.

(2)

For all purposes, except as otherwise provided, in the Income Tax Acts—

(a)

references to a firm F1or partnership include a limited liability partnership in relation to which subsection (1) applies,

(b)

references to members F2or partners of a firm F3or partnership include members of such a limited liability partnership,

(c)

references to a company do not include such a limited liability partnership, and

(d)

references to members of a company do not include members of such a limited liability partnership.

(3)

Subsection (1) continues to apply in relation to a limited liability partnership which no longer carries on any trade, profession or business with a view to profit—

(a)

if the cessation is only temporary, or

(b)

during a period of winding up following a permanent cessation, provided—

(i)

the winding up is not for reasons connected in whole or in part with the avoidance of tax, and

(ii)

the period of winding up is not unreasonably prolonged.

This is subject to subsection (4).

(4)

Subsection (1) ceases to apply in relation to a limited liability partnership—

(a)

on the appointment of a liquidator or (if earlier) the making of a winding-up order by the court, or

(b)

on the occurrence of any event under the law of a territory outside the United Kingdom corresponding to an event specified in paragraph (a).

Annotations

Textual amendments

F1

Words in s. 863(2)(a) inserted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 580(a) (with transitional provisions and savings in Sch. 2)

F2

Words in s. 863(2)(b) inserted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 580(b)(i) (with transitional provisions and savings in Sch. 2)

F3

Words in s. 863(2)(b) inserted (6.4.2007 with effect as stated in s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), ss. 1027, 1034, Sch. 1 para. 580(b)(ii) (with transitional provisions and savings in Sch. 2)

Modifications

C1

S. 863 modified by 2010 c. 8, s. 259G(8) (as inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1)

C2

S. 863 modified by 2010 c. 8, s. 259GE(8) (as inserted (with effect in accordance with Sch. 10 paras. 18-21 of the amending Act) by Finance Act 2016 (c. 24), Sch. 10 para. 1)

Notes on Part 9

Modifications

C1

Pt. 9 applied (1.4.2010) by Income Tax Act 2007 (c. 3), ss. 809BZH(2)(a), 809BZK(4)(a) (as inserted (with effect in accordance with s. 381(1) of the amending Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 381(1), Sch. 5 para. 3 (with Sch. 9 paras. 1-9, 22))

C2

Pt. 9 modified (with effect as mentioned in Sch. 6 para. 6(2)-(7) to the amending Act) by Income and Corporation Taxes Act 1988 (c. 1) , s. 774D(4) as inserted by Finance Act 2006 (c. 25), s. 76, Sch. 6 para. 6(1)