Corporation Tax Act 2010 section 56

Restriction on reliefs for limited partners

Section 56 restricts the amount of loss relief that a company acting as a limited partner in a firm can claim, capping it at the level of the company's contribution to the firm.

• Where a company carries on a trade as a limited partner and makes a loss in that trade during an accounting period, restrictions apply to the loss relief it can claim.
• Relief claimed under sections 37 or 45A (trade losses against total profits, other than profits of the limited partnership trade), Part 5 (group relief), or Part 5A (group relief for carried-forward losses) is subject to this restriction.
• The total of all such relief claimed — both for the current loss and for any other losses from the limited partnership trade in periods when the company was a limited partner — must not exceed the company's contribution to the firm, measured at the end of the loss-making period or, if earlier, when the company ceased the trade.
• If the firm carries on or has carried on more than one trade, the restriction is applied separately to each trade and the results are then added together to determine the overall cap.