Section 863G — Finance Act 2014: Anti-avoidance

Anti-avoidance 863G 1 In determining whether section 863A(2) applies in the case of an individual who is a member of a limited liability partnership, no regard is to be had to any arrangements the main purpose, or one of the main purposes, of which is to secure that section 863A(2) does not apply in the case of—

a the individual, or b the individual and one or more other individuals.

2 Subsection (4) applies if—

a an individual (“X”) personally performs services for a limited liability partnership at a time when X is not a member of the partnership, b X performs the services under arrangements involving a member of the limited liability partnership (“Y”) who is not an individual, c the main purpose, or one of the main purposes, of those arrangements is to secure that section 863A(2) does not apply in the case of X or in the case of X and one or more other individuals, and d in relation to X's performance of the services, an amount falling within subsection (3) arises to Y in respect of Y's membership of the limited liability partnership.

3 An amount falls within this subsection if—

a were X performing the services under a contract of service by which X were employed by the limited liability partnership, and b were the amount to arise to X directly from the limited liability partnership, the amount would be employment income of X in respect of the employment.

4 If this subsection applies, in relation to X's performance of the services, X is to be treated on the following basis—

a X is a member of the limited liability partnership in whose case section 863A(2) applies, b the amount arising to Y arises instead to X directly from the limited liability partnership, c that amount is employment income of X in respect of the employment under section 863A(2) accordingly, and d neither that amount, nor any amount representing that amount, is to be income of X for income tax purposes on any other basis. 4A Section 863A(2) does not apply in the case of a member of a limited liability partnership if, apart from this subsection, it would apply in consequence of arrangements the main purpose, or one of the main purposes, of which is to secure that section 850C does not apply for one or more periods of account in relation to—

a the member, or b the member and one or more other members of the limited liability partnership.

5 In this section “ arrangements ” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).