Commentary on Sections Overview Overview Section 409: Business successions between partnerships
1151.This section ensures continuity of relief in certain cases where, in law, a partnership is dissolved. It is based on ESC A43.
1152.Under section 362 of ICTA, relief for interest paid is only available for so long as the individual is a partner in the partnership in which the investment is made. In strictness, the admission or departure of a partner results in a new partnership, but it has never been the practice to refuse relief in these circumstances. Indeed, ESC A43 goes further and allows relief to continue when there is a partnership reconstruction involving a merger or demerger.
1153.Subsections (1) and (2) of this section gives statutory effect to current practice and ESC A43 to the extent that they relate to partnership changes and reconstructions. See Change 75 in Annex 1.
1154.Subsection (3) builds into the section the extended meaning of “member of a partnership” that is explained in Change 70 in Annex 1. See also the commentary on section 399.
1155.ESC A43 also deals with other types of business successions including the incorporation of a partnership. These cases are addressed in section 410.