Finance Act, 1992

Amendment of section 46 (limited partnerships: relief restrictions) of Finance Act, 1986.

23.—(1) Section 46 of the Finance Act, 1986 , is hereby amended, in subsection (2)—

(a) by the substitution, in paragraph (a), of “only against income consisting of profits or gains arising from the trade and” for “, otherwise than against income consisting of profits or gains arising from the trade,”, and

(b) by the substitution, in paragraph (b), of “only against profits or gains arising from the trade and” for “, otherwise than against profits or gains arising from the trade, or to another company,”,

and the said paragraphs (a) and (b), as so amended, are set out in the Table to this section.

(2) (a) This section shall apply and have effect, in relation to an amount given or allowed under any of the specified provisions within the meaning of section 46 of the Finance Act, 1986 , as respects a contribution (within the meaning of that section) by a limited partner to the trade of the limited partnership which is made on or after the 24th day of April, 1992.

(b) In determining whether an amount is given or allowed under any of the specified provisions, within the meaning of section 46 of the Finance Act, 1986 , as respects a contribution to a trade, within the meaning of that section, on or after the 24th day of April, 1992, any amount which would not otherwise have been given or allowed by virtue of that section but for a contribution to a trade on or after the said date and on the basis that paragraph (a) had not been enacted, shall be treated as given or allowed as respects such a contribution.

(3) Notwithstanding subsections (1) and (2), this section shall apply in so far as the trade of a limited partnership consists of the management and letting of holiday cottages within the meaning of section 255 of the Income Tax Act, 1967 , where—

(a) a written contract for the construction of the holiday cottages was signed and construction work had commenced before the 24th day of April, 1992, and

(b) the construction work is completed before the 6th day of April, 1993,

as if references to a contribution to a trade by a limited partner on or after the 24th day of April, 1992, were references to such contribution on or after the 1st day of September, 1992.

TABLE

(a) Where, in the case of an individual who is a limited partner in relation to a trade, an amount may, apart from this section, be given or allowed under any of the specified provisions—

(i) in respect of a loss sustained by him in the trade or of interest paid by him by reason of his participation in the trade, in a relevant year of assessment, or

(ii) as an allowance falling to be made to him for a relevant year of assessment either in taxing the trade or by way of discharge or repayment of tax to which he is entitled by reason of his participation in the trade,

such an amount may be given or allowed only against income consisting of profits or gains arising from the trade and only to the extent that the amount given or allowed or, as the case may be, the aggregate amount in relation to that trade, does not exceed the amount of his contribution to the trade as at the relevant time.

(b) Where, in the case of a partner company which is a limited partner in relation to a trade, an amount may, apart from this section, be given or allowed under any of the specified provisions—

(i) in respect of a loss sustained by the partner company in the trade, or of charges paid by the partner company or another company by reason of its participation in the trade, in a relevant accounting period, or

(ii) as an allowance falling to be made to the partner company for a relevant accounting period either in taxing the trade or by way of discharge or repayment of tax to which it is entitled by reason of its participation in the trade,

such an amount may be given or allowed to the partner company only against profits or gains arising from the trade and only to the extent that the amount given or allowed, or, as the case may be, the aggregate amount does not exceed the partner company's contribution to the trade as at the relevant time.