Commentary on Sections Changes in partnership
3195.Section 114(1) of ICTA provides that the business profits of a firm are calculated for corporation tax “as if the partnership were a company” (referred to in this part of the commentary as the “deemed company”). This rule applies “so long as” a company carries on the business in partnership.
3196.The deemed company exists only during the life of the partnership. So a company is treated as ceasing to carry on a business when that company takes another person into partnership (because the deemed company then carries on the business). And the deemed company is treated as ceasing to carry on a business when the partnership business is taken over by a company on its own.
3197.Furthermore, the deemed company calculation is made without regard to any change in the persons carrying on the business except that a change in the persons is treated as a transfer of the business to a different company if there is no company which carries on the business before and after the change.
3198.The occasions on which a company is treated as ceasing to carry on a business are set out in the rules to which they are relevant (see sections 77(5), 80 and 162(3)). They also appear in this Part in sections 1267(3) and (4) and 1271(3).