Income Tax Act 2007 section 108

Meaning of "contribution to the LLP"

Section 108 defines how to calculate an individual member's "contribution to the LLP" for the purposes of the loss relief restriction in section 107, by adding together two components known as Amount A and Amount B.

• Amount A is the capital the individual has contributed to the LLP, including any share of profits added to capital, reduced by amounts already drawn out, receivable back within five years, or reimbursable by another person
• Amount B is any additional liability the individual would have to contribute to the LLP's assets on a winding up, provided that liability persists for at least five years from the relevant time
• Profits used in the calculation are those determined under generally accepted accounting practice, before any tax adjustments, and withdrawals that are themselves charged to income tax as trading profits are not treated as reductions to capital
• The calculation must also take into account exclusions required by section 113A and any regulations made under section 114, which may further reduce the contribution figure