Corporation Tax Act 2009 section 1264A

Excess profit allocation to non-individual partners etc

Section 1264A deals with adjustments to a corporate partner's taxable profits where anti-avoidance rules have reallocated excess profit shares away from a non-individual partner (such as a company) to an individual partner.

• Where anti-avoidance rules increase an individual partner's profit share (or create a deemed profit share) at the expense of a corporate partner, the company's own taxable profits from the partnership must be adjusted accordingly.
• The adjustments must be made on a just and reasonable basis for the firm's accounting period that coincides with, or falls within, the relevant period of account.
• If the firm's accounting period does not exactly coincide with the relevant period of account, adjustments are spread across whichever of the firm's accounting periods the relevant period falls within.
• Certain income tax provisions relating to the characterisation of excess profit allocations and payments made by the corporate partner out of the excess portion of its profit share also apply for corporation tax purposes.