Income Tax (Trading and Other Income) Act 2005 section 863F

M's contribution to the limited liability partnership: deemed contributions

Section 863F deals with how promised but not yet made capital contributions to a limited liability partnership are treated when determining whether a member is a salaried member under condition C.

• Where a member has given an undertaking (whether legally enforceable or not) to contribute capital to the LLP by a specified deadline, that promised contribution can be temporarily treated as if it has already been made for the purposes of testing condition C.
• The deadline for making the promised contribution is either 5 July 2014 (for existing members at 6 April 2014) or two months after the date the member joins the LLP, whichever ends later — this is referred to as "the relevant period".
• If the member actually makes the contribution within the relevant period, condition C is not re-tested simply because the actual payment has been made — the original determination stands.
• If the member fails to make all or part of the promised contribution by the end of the relevant period, the earlier determination of condition C must be revisited, this time ignoring the unpaid portion of the deemed contribution.