Corporation Tax Act 2009 section 133M

Application of sections 133A and 133B in relation to corporate partner

Section 133M sets out how the rules restricting deductions for banking compensation payments and providing an uplift for related handling costs apply where a trading firm has a corporate partner within the charge to corporation tax.

• Where a firm carries on a trade and has a corporate partner subject to corporation tax, the firm's trade profits (for the corporate partner's share) are calculated as if the compensation deduction restriction that applies to banking companies also applied to the firm
• The firm's conduct counts as "relevant conduct" only if it occurs on or after 29 April 1988, the corporate partner is a banking company, and the firm itself would not qualify as an excluded company
• The disclosure condition (which can allow a deduction) may be satisfied either by documents relating to the firm's liability or by documents relating to the corporate partner's liability
• The percentage uplift for administrative and handling costs of compensation (under section 133B) applies to the firm in the same way as it would to a company, so that non-deductible compensation expenses receive the same treatment as they would if the firm were a company in its own right