INTM550630 - Hybrids: definition of key terms: partnership and partnership members

Partnerships

There is no definition of a partnership for the purposes of Part 6A TIOPA 2010, so the term will take its usual meaning in UK law, that is, the relation between persons carrying on a business in common with a view to profit.

259NE considers partnerships and the treatment of a person who is a member of a partnership.

A partnership is a person for the purposes of the hybrid mismatch rules.

A partnership is regarded as transparent for UK tax purposes, with the result that the partnership’s income, profits etc. are treated as the income, profits etc. of its partners. However, some partnerships may be treated as opaque under the tax laws of other territories, leading to potential hybrid mismatches.

S259NE(4)(a) includes entities established under the law of a territory outside the UK that are of a similar character to a UK partnership. An entity regarded as transparent is not necessarily of a similar character to a UK partnership and must be considered on the full facts and characteristics. This subsection is intended to ensure that the treatment of non-UK partnerships, for Part 6A purposes, is consistent with the treatment of UK partnerships and not to extend the definition of a partnership.

Partners

S259NE sets out the treatment of a person who is a member of a partnership.

Any reference to income, profits or an amount of the person includes a reference to the person’s share of the income, profits, or an amount of the partnership. A person’s share of the income, profits or amount of a partnership is determined by apportioning between the partners on a just and reasonable basis.