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PM224000 | The power to enjoy

From HM Revenue & Customs · Partnership Manual

ITTOIA/S850C (18)-(21)

For Condition Y to apply, the individual must meet the power to enjoy requirement in relation to the profit that has been allocated to the non-individual member.

The individual has the power to enjoy the non-individual’s profits if:

  • the parties are connected (see PM225000), or

  • the individual is party to arrangements a main purpose of which is to secure that the non-individual’s profit share is subject to corporation tax rules rather than income tax provisions (see PM226000) or

  • any of the enjoyment conditions is met (see PM227000).

This test is widely drawn and does not depend upon the individual deriving any direct benefit from the profits allocated to the non-individual member.