Income Tax Act 2007 section 113A

Exclusion of amounts contributed to access relief

Section 113A prevents certain capital contributions to a firm or LLP from counting towards a partner's contribution for loss relief purposes, where those contributions are made mainly to obtain a tax advantage.

• Capital contributed to a firm or LLP is excluded from the calculation of a partner's contribution if the main purpose of making it is to reduce tax through sideways relief or capital gains relief
• For LLP members, the exclusion applies where the individual does not devote a significant amount of time to the trade during the relevant period for the tax year in question
• A contribution has a "prohibited purpose" if the main reason, or one of the main reasons, for making it is to obtain a reduction in tax liability via sideways relief or capital gains relief
• The exclusion does not apply to any loss that derives wholly from qualifying film expenditure