ANNEX 1:: MINOR CHANGES IN THE LAW MADE BY THE BILL This change is in principle and in practice adverse to some taxpayers and favourable to others. It also affects when tax is paid and administrative requirements. But the numbers affected are expected to be few and the amounts involved small.
Change 16: Trading losses: restrictions: contribution to the firm in place of contribution to the trade: sections 104, 105, 106, 107, 108, 110, 111, 114, 792, 793, 794, 797, 800, 801, 802, 803, Schedule 2Part 5 (restriction on reliefs for non-active partners: pre-10 February 2004 events and application of existing regulations under sections 114 and 802) and Schedule 2Part 14 (individuals in partnership: recovery of excess relief and individuals claiming relief for film-related trading losses)
This change provides for certain restrictions (and related anti-avoidance provisions) on the use of trade losses, incurred by individuals in a partnership, to operate by reference to the individual’s contribution to the firm (rather than contribution to the trade, as in source legislation). It also deals with a number of consequential matters and clarifies a number of points about what is included in an individual’s contribution.