Taxation of Chargeable Gains Act 1992 section 59A

Limited liability partnerships

Section 59A sets out how limited liability partnerships (LLPs) carrying on a trade or business with a view to profit are treated as tax-transparent partnerships for capital gains purposes, so that gains are assessed on the individual members rather than on the LLP itself.

• An LLP carrying on a trade or business with a view to profit is treated as a transparent partnership for capital gains tax purposes — its assets are regarded as held by the members, and any dealings are treated as dealings by those members, with each member assessed separately on their share of any chargeable gains.
• Throughout the capital gains legislation, references to partnerships and their members include qualifying LLPs and their members, while references to companies and company members do not include such LLPs or their members.
• The transparent partnership treatment continues during temporary cessations of trade, and during an informal winding-up period after permanent cessation provided the winding up is not connected with tax avoidance and is not unreasonably prolonged — but it ceases on the appointment of a liquidator or a court winding-up order (or an equivalent event under foreign law).
• When transparency ceases, the LLP is treated as a body corporate and chargeable gains on its assets are computed as if it had never been a partnership — however, neither the start nor the end of the transparency treatment is itself treated as giving rise to a disposal of assets by the LLP or its members.