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AIA's for partnership

One partner owns an asset which he has previously owned personally. Partners agree that that they would like to purchase the asset for the partnership at an agreed market value.

For AIA purposes does this fall foul of both the related parties and previous use restriction or does the 'commercial' nature of the transaction overide one or both?

Ignoring the above specific scenario could someone definitively tell me whether membership of an LLP is related to other corporate activities controlled by a member (for AIA purposes)? In HMRC guidance it says explicitly that an individual does not have to consider corporate and non-corporate activities in this respect by an LLP is incorporated so I am not sure.

Many thanks as ever!


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26th Nov 2012 14:11


AIA is a bizarre little allowance in some ways.

Businesses which are under common control have to share the AIA if (and only if) they share the same premises and/or carry on a similar trade as defined by the EU NACE classification.

However you cannot share an allowance between two separate taxes which why where a partnership controls a company they BOTH get the AIA in full!  That is why the HMRC guidance talks about corporate and non-corporate activities.  For this purpose an LLP is a non-corporate activity provided it is active.

However where a company is a partner in a partnership or LLP the AIA is NOT available (see Hoardwheel v HMRC).

It is also not available where acquired from a connected person...



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I'd say that...

The individual partner and the partnership aren't connected under S.214/S.217 CAA 2001 where the transaction is taking place at market value for bona fide commercial reasons, because S.575(4) says that they're not where the partnership is acquiring assets "pursuant to genuine commercial arrangements".

I can't see the previous use restriction coming into play, as CAA generally treats a partnership as a person separate from those that are partners, in particular, the definition of a qualfying person for AIA purposes in S.38A(3).

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