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Conditions for CTA09/S536

This guidance applies to companies that have interests in partnerships up to 21 April 2009

If one of the two conditions at either CTA09/S537 or S538 are met, then S536 will apply.

CTA09/S537

S537(1) sets out a condition for S536 to apply:

These are that a company has to be party to ‘relevant arrangements� under which:

• a partnership of which it is a member is or may become entitled to receive a capital contribution from any person (directly or indirectly), and
• the person making the capital contribution or a connected person receives a sum of money or other asset from that company (directly or indirectly).

CTA09/S538

S538(1) sets out a condition for S536 to apply:

These are that a company has to be party to ‘relevant arrangements� under which:

• the company makes a capital contribution to a partnership of which it is a member, and
• the company is allocated less than its ‘due shareâ€� of the profits, and
• the company, or a person connected to the company, is entitled to more than its ‘due shareâ€� of the capital.

The terms ‘relevant arrangements�, ‘connected persons�, ‘arrangements�, ‘tax advantage� and ‘due share� are explained at CFM45450.